The government is proposing to permanently remove abatement rules for members of the NHS Pension Scheme.
The proposal has been outlined in a Department of Health and Social Care consultation aimed at retaining staff in the NHS to clear backlogs.
Abatement is the process by which NHS workers’ pensions are reduced pound for pound if their earnings plus the ‘unearned’ element of their NHS pension exceed their pre-retirement NHS pensionable earnings.
It was suspended during the Covid-19 pandemic to encourage recently retired NHS staff to return to work and to tackle the crisis without suffering a penalty on their pension but the suspension is due to expire at the end of March 2025.
But as part of the 2023-24 pay deal, the government has outlined its intention to permanently remove abatement from April.
The Department of Health and Social Care said: "For members with long careers, the abatement ceiling has previously prevented them from working more than half time in the week should they return to work before age 60.
"The removal of abatement is important in the context of the delivery of NHS services. [It] is currently suspended to March 31, 2025 and permanently removing it ensures a continued capacity boost beyond that point because members can continue to work above their abatement ceiling."
The members are affected are chiefly nurses, physiotherapists, midwives and health visitors who were members of the scheme before March 1995, and who were eligible to retire at age 55 rather than 60 with no actuarial reduction in their pension.
The industry has long called for the removal of abatement rules.
Graham Crossley, NHS pension expert at Quilter, said: “The permanent end to abatement is something that pretty much everyone has wanted to get rid of to aid retention of staff.
"The industry has been pushing for the rules to be scrapped entirely and not brought back at all. So, it is great that the DHSC has seen sense and opted to permanently get rid of abatement.”
Last year, figures obtained by Quilter through a Freedom of Information request revealed more than 7,000 doctors and nurses could be at risk of a financial penalty on their pension as a result of the abatement rules coming back into force.
Crossley added: “This could have forced them to leave the health service as a result so it is very positive that the government has made the right decision to get rid of it altogether.”
amy.austin@ft.com
