30 October 2023
If you are covering the news that the DHSC are looking to permanently scrap the abatement rules for the NHS, please see the following comment from Graham Crossley, NHS pensions expert at Quilter:
"The permanent end to abatement is something that pretty much everyone has wanted to get rid of to aid retention of staff.
"The abatement rules were suspended during the pandemic to allow recently retired NHS staff to return to work and to tackle Covid and the backlog without suffering a penalty on their pension. However, 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.
"Had the rules been brought back NHS workers’ pensions would have been reduced pound for pound if their earnings plus the ‘unearned’ element of their NHS pension exceed their pre-retirement NHS pensionable earnings, which is called ‘abatement’.
"Figures obtained by Quilter through a Freedom of Information request last year revealed that over 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. This could have forced them to leave the health service as a result so it is very positive that the government have made the right decision to get rid of it altogether.
"However, it's unfortunate that the same common sense has not been applied to the new partial retirement rules. The 10% reduction on pay to facilitate partial retirement is causing issues up and down the country, and the proposed changes to remove salary sacrifice from the 10% pay reduction requirement is a step in the opposite direction. The confusion amongst employers to how to implement the 10% rule has led to some adopting policies that cause their staff significant financial harm.
"I hope that if government truly want to improve retention, and reduce waiting lists, they listen to the inevitable feedback to this consultation requesting that the 10% rule be scrapped."
