Here is the statement from the Secretary of State for Health and Social Care – Matt Hancock.
I have agreed to support this proposal from NHS England and NHS Improvement for reasons of urgent operational necessity.
The scheme involves employers making binding contractual commitments to be given to every affected NHS clinician so as to ensure that this commitment is honoured. Full details of the terms of the payment arrangements are set out in letters that are being sent to each affected clinician by their employer including the terms and conditions of the offer.
This contractual commitment contains the provision that in order for it to be operative, the affected clinician must make a Scheme Pays election in relation to the tax charge for 2019/20 only relating to accrual in the NHS Pension Scheme excluding 2019/20 additional voluntary contributions (AVCs) that is accepted by the NHS Business Service Authority.
These binding contractual commitments will provide for payment to be made when the clinician takes their pension, at which point the employer (or its successor) will be liable for the payment. NHS England has undertaken to provide funding to the employer (or its successor) in respect of those liabilities as the payments are made.
There are long-standing precedents for how the liabilities of NHS bodies are met and the government will act in accordance with these.
Should the NHS trust or foundation trust employing the clinician cease to exist, there are statutory provisions to ensure its liabilities, including commitments to staff, would be transferred to one or more existing NHS bodies, or the Secretary of State. The Secretary of State ultimately takes responsibility for the liabilities of NHS bodies including NHS England and NHS Improvement.
Legislative changes to NHS structures by successive governments have previously made provision for the liabilities of organisations that cease to exist to transfer to successor bodies or the Secretary of State. The commitment to make these payments will be contractually binding and if either (a) there is no employer or other NHS body to make this payment at the time the clinician retires or at any later time when a payment falls to be made, or (b) any NHS body to whom these liabilities are transferred does not have sufficient assets to make the payment, the Secretary of State undertakes responsibility for making the payment, or securing that it is made.
Therefore, these payments will be honoured even if the NHS body no longer exists in the future. In order to provide the same level of assurance to clinicians who are TUPE transferred outside the NHS, NHS England undertakes to ensure that the financial responsibility for meeting any employer’s liabilities in relation to this commitment is transferred or remains with an NHS body as part of a future transfer process.
Clinicians are therefore now immediately able to take on additional shifts or sessions without worrying about an annual allowance charge on their pensions.
Matt Hancock, Secretary of State for Health and Social Care
It’s good that clinicians (and doctors in future) will be able to earn without fear of penal pension taxation, but this is not a long-term fix to the problem. This blog has constantly complained about the repeated failure of Government to act on recent consultations on pension tax incentives. This crisis is a result of this failure.
Specifically mentions NHS and foundation trusts but omits to mention organisations providing NHS services where employees are members of NHS pension scheme eg GPS, not for profits etc. Needs urgent clarification @JosephineCumbo @goldstone_tony @TheBMA
— Dr Kate Lovett (@DrKateLovett) December 7, 2019
I strongly advise all senior doctors to ignore BMA’s backing of this offer on #NHS pensions. Laws can change & do change, especially when the political economy changes. Doctors would be daft to accept this. We are winning the argument. Stick at 10PAs or less. #scrapthetaper https://t.co/ncjGM99NxA
— Clive Peedell (@cpeedell) December 7, 2019
It’s actually not that good for doctors.
The most consultants will not sign up to a ‘take a high interest loan now to pay off a punitive tax bill in the hope that the government reimburses you 30 years down the road’
But I do see your point.
— ClinOncDoc (@ClinOncDoc) December 7, 2019
Government “fix” is a con pic.twitter.com/39Li8ULW62
— John Ralfe (@JohnRalfe1) December 7, 2019
Politically, we are now in a climate of “zero trust” and this statement, though made by an active secretary of state, is being classed as a political promise.
We cannot use tax-payers money to pay-off one group of voters at the expense of another. The doctors have a very real grievance (as this blog has promoted for some years). The timing of the first proposed solution to a problem we have known about since 2017 is less than a week away from an election.
Pensions last a lifetime and pension liabilities stretch indefinitely into the future. Responsible Governments legislate for permanence , not for votes.
The NHS pension scheme is unfunded and is paid by the tax-payer as we go; so you can insert “tax-payers” for “assets” – but you get the idea
The black one is your pension scheme liability value.
— Mike Harrison (@HigherEdActuary) December 7, 2019
If you would like to see details of the offer and the frequently asked questions on subjects such as AVCs, added years, scope and timeframes – read here