Calls for NHS pension reform to tackle 'medical staffing crisis'

The committee’s report noted the complex and “punitive” interaction between the NHS scheme and tax system, which it said — drawing from survey data by the BMA — has led to doctors reducing working hours, and a large number either opting out of the scheme or else retiring early.

“A recent survey of 8,000 members by [the BMA]... showed that 72 per cent of respondents may choose to retire earlier and 61 per cent would reduce their working hours because of tax rules,” the committee said. 

“Previous BMA surveys have shown that more than half of surgeons in Wales were advised by an accountant or financial adviser to work fewer hours in the NHS. HM Treasury has made some changes to the tax system in order to support senior clinicians, but ultimately doctors need to make an informed choice about their working patterns.”

It further highlighted the high opt-out rate among younger NHS staff in particular, while the NHS pension scheme has an average gender pay gap of 63 per cent.

Dr Sarah Tennant, pensions lead at HCSA, the hospital doctors’ union, said: “The very viability of the NHS Pension Scheme is at stake if the Treasury does not alter its misguided, dogmatic attitude and ensure that its future approach is not just based on the breathless pursuit of cost savings, but fully considers the long-term implications for recruitment, retention and equality.”

A similar problem had previously existed stemming from the tax treatment of judges’ pensions, and the government recently made changes to their scheme specifically that better accounted for their unique situation.

The BMA argued that something similar should be done for the NHS pension scheme.

Dr Vishal Sharma, BMA pensions committee chair, said: “The report notes the government’s failure to fully appreciate the role pensions play in recruitment and retention, with the NHS pension scheme contributing a critical segment of staff’s total reward and remuneration package.

“However, as the BMA has long highlighted — and as the committee underlines in its paper — the complex and punitive NHS pension system continues to be [a key reason] behind the medical staffing crisis.”

“The government recently made changes to tackle similar recruitment and retention issues for judges, removing tax relief from employee contributions, which means they are not subject to the additional taxation that has been so damaging to the medical workforce,” he continued.

“Therefore, ministers should introduce similar measures for doctors and their colleagues to ensure that they can remain working in the health service at such a pivotal time for the nation’s health.”

Graham Crossley, NHS specialist at Quilter, was more cautious about the proposals.

The BMA’s push for an alternative structure was understandable, he said. However, “this would make a complex pension scheme even more complex”. 

He added: “If this were to be pursued then it would need to be accompanied with the right levels of support and financial education for members. One thing is clear: when we look at the amount of doctors who are leaving the NHS or reducing their hours, it is obvious that something needs to be done to improve recruitment and retention.”