An NHS pensions expert has identified mistakes in almost one in five pension records, having spotted misallocated arrears that artificially inflated a member’s pension growth, which would have otherwise triggered a £15,000 annual allowance charge.
MediFintech technical director Jack Needham told FTAdviser's sister publication Pensions Expert that the 20 per cent error rate relates to the frequency of mistakes found during his first month directly supporting members of the NHS Pension Scheme.
Needham previously worked at the NHS Business Services Authority.
“There are many points of failure in the recording and processing of NHS pensions data, which can lead to overstated pension growth, which leads to incorrect annual allowance charges,” he said.
“NHS Pensions would not know this due to automation of [annual allowance] statements and no access to the data needed to spot the errors.”
One GP was left ‘in limbo’
NHS pension records have been dogged by inaccuracies, with former health minister Edward Argar telling MPs in March that there were nearly 20,000 NHS GP pension records in error.
The British Medical Association called for an end to the outsourcing of NHS pensions administration to Capita, which is part of a long-term contract that was extended by three years in June.
Needham summarised the errors that he has witnessed in records during his first month at MediFintech. These included mistakes on pay, with one member paying pension contributions for an added year’s contract that had long since finished.
Another member’s pensionable pay increment, meanwhile, had not been applied at the right time. Correcting it resulted in higher pay and a £9,000 annual allowance saving, as it moved their annual allowance growth into the 2019-20 annual allowance compensation year.
Elsewhere, one GP member, who had a role that finished in 2017, had not had their record closed by Primary Care Support England. This meant that their pension record “was in limbo”, leaving them without pension statements or annual allowance statements, Needham said.
He also cited the case of Nick Ferran, who approached MediFintech to review his NHS pension. Misallocated arrears on his pension record were identified, which artificially inflated his pensionable pay and therefore artificially inflated his pension growth.
Correcting this error reversed the £15,000 annual allowance charge he would have otherwise faced. Needham said that in September, a handful of other cases of misallocated arrears have also been spotted.
NHS Pensions ‘at the end of the line’
Needham stressed that these errors are not usually the fault of NHS Pensions. He added that his clients are those that are having problems with their pensions, meaning that this error rate may be higher than usual and not reflective of the wider NHS pensions community.
“NHS Pensions are at the end of the line with regards to administration,” he said, with systems built to automatically produce statements for 80 per cent to 90 per cent of members.
Administrators are charged with authorising statements, but the data cannot be verified unless NHS Pensions has access to information such as wage slips.
“Eventually, as more development takes place, [the] NHS will move towards being fully automated and issue statements based on updates and eventually move to online — similar to internet banking,” he said.
“The barriers are the complexities of the NHS Pension Scheme. There is no one answer [that] fits all. So this will be a long process with lots of teething problems along the way – which is expected.”
Needham suggested that NHS Pensions could apply filters to its automation in order to capture system errors.
“It has been known and a big problem in the past where statements were incorrectly issued due to a system error. I believe this is on their ‘to do’ list,” he said.
An NHS Pensions spokesperson said: “On behalf of the Department of Health and Social Care, we work in partnership with NHS employers to administer and update the NHS pension records of our 3.4mn members and we are committed to doing so efficiently.
“It is the responsibility of NHS employers to ensure that a member’s information they provide to us is up to date and accurate. There are multiple validation processes already built into the NHS Pensions Compendia system and any possible additional validation checks are considered at the point of system developments.
“We continue to work with employers to validate the records we receive from them and to help them improve their processes. Our employer team are available to provide any support,” they added.
Alex Janiaud is deputy editor at Pensions Expert, FTAdviser's sister publication
