Trust pension grab set to 'fatally undermine' flexibilities plan, Hospital Doctors warn

NHS employers’ reluctance to enforce a national policy to prevent Trusts retaining pension contributions is creating a postcode lottery which threatens to fatally undermine flexibilities meant to ease the impact on care of the current “tax trap”, HCSA – the union for Hospital Doctors has warned.

Current plans envisage a voluntary code which leaves Trusts able to claw back over 20% of Hospital Doctors’ remuneration package for those who reduce pension contributions via the planned facility.

But HCSA has identified the issue as a significant barrier to take-up by Hospital Doctors when flexibilities are introduced next April.

The current position means that a doctor who reduces their pensions contribution rate to avoid hitting annual allowance thresholds would not only face a reduction in their future retirement pot but would face an immediate 20.68 per cent cut to the value of their remuneration package at Trusts refuse to “recycle” their payment to doctors.

A Freedom of Information request by HCSA to all 153 acute Trusts and Foundation Trusts revealed that of the 108 who responded just 10 Trusts had a policy where employer contributions of those opting out of the NHS Pension scheme were recycled to hospital doctors in pay packets. Another seven Trusts (6.5 per cent) are either developing or considering whether to develop a scheme, while one had suspended its policy “pending a national solution”.

The remaining 83.3% of Trusts said that they have no scheme in place.

Yet in its own research 56.6% of HCSA members surveyed said that they would only make use of the flexibilities if they could retain the employer contribution. Just 9.4% said this would not influence their decision, while 30.5% said that they did not know.

In its recent submission to a government consultation on Pension Flexibilities, HCSA warned that allowing the policy to be used on a discretionary basis could have significant negative consequences for a number of other reasons:

  • It could further undermine already low levels of morale for those doctors who utilise the flexibilities on offer, but are unable to access the employer contribution.
  • It could have the effect of creating a ‘postcode lottery,’ which distorts the local labour market, with significant variations in take-home pay available on a purely arbitrary basis.
  • If applications for retention of employer contributions are considered on a ‘case by case’ basis, rather than being available to all staff who meet a specified criteria, there is a potential for instances of perceived discrimination or favouritism to arise.

HCSA is arguing that a mandatory scheme should be applied to all Trusts, with nationally set terms, in consultation with Trade Unions.

HCSA President Dr Claudia Paoloni said: “We have grave doubts over the reliance on pensions flexibilities to ease the service and staffing issues the Treasury’s tax trap is creating on the ground, and maintain that the only solution is the removal of the taper and the reform of allowances.

“But even according to the logic of these reforms, our research suggests that allowing a free-for-all where Trusts can snatch more than 14 per cent from the remuneration of hospital doctors who use the flexibilities will prove a major barrier to take-up.

“We are urging the architects of this scheme to see sense, end this self-defeating policy and put in place a cost-neutral national policy to ensure that not a penny can be taken from the pay packets of hospital doctors who will already be taking a cut to the value of their pension at retirement.”