NHS Pension Inflation “Fix”
The Department of Health and Social Care have this week (w/c 5 December 2022) published a pension scheme consultation which includes the long awaited announcement over how they propose to “fix” the inflation impact on members’ annual allowance positions.
The proposed changes are very welcome and will certainly help with the level of annual allowance tax charges for the current 2022/23 year by removing the impact of inflation from the calculations. However, the proposals do not remove annual allowance issues entirely. High earners and consultants are still likely to be at risk of annual allowance tax charges and may therefore still need to take steps if they wish to mitigate any liabilities.
Other changes included in the consultation will benefit those close to retirement age, with the prospect of more flexibility being introduced. The proposals would:
- allow members to draw their 1995 pension and continue to contribute to their 2015 scheme pension.
- remove the restriction to keep NHS work below 16 hours for the month after 24 hour retirement.
- allow full drawdown of the 2008 and 2015 scheme pensions.
The consultation also aims to enhance PCN access to the pension scheme, making some existing access routes permanent and automatic, and extending access to PCN sub-contractors such as some PCN companies.
The consultation period closes on midnight on 30 January 2023, with reforms anticipated to be brought in by late spring, with the inflation fix being retrospective to apply to the 2022/23 tax year. The measures only seem to apply to the English/Welsh pension legislation and we are yet to see whether the same measures will also be considered in Scotland.
If you have any queries, please get in touch with your usual pension allocation, or email us and we'll get back to you.
