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New data shows over 7,000 NHS staff may retire in March to avoid pension penalty

Date: 17 January 2022

3 minute read

17 January 2022

New data obtained by Quilter, the wealth manager and financial adviser, shows that the expiry of Coronavirus Act powers in March 2022 risks triggering thousands of nurses and doctors to leave the NHS to avoid a financial penalty.

On 3 March 2020, the UK government published their coronavirus action plan, which set out measures to respond to the COVID-19 outbreak. One measure was to allow recently retired NHS staff to return to work and tackle the pandemic without suffering a penalty on their pension.

The temporary suspension comes to an end on 24th March 2022 and data shows over 7,000 doctors and nurses may be affected by the changes and could choose to retire as a result.

Some members of the NHS pension scheme are allowed to retire at age 55 without any reduction to their pension. This includes nurses with ‘special class’ status and psychiatrists with ‘mental health officer’ (MHO) status.

On re-employment in the NHS, their NHS pension is 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.’

Data from the NHS Business Services Authority (NHSBSA) shows that it has mailed 10,729 NHS pension scheme members in relation to the upcoming legislative changes of which 7,470 could be adversely impacted by the return of abatement.

These can be split into three groups:

  • Group 1 – 3,259 members (621 have MHO)

    These members were abated prior to 25/03/2020, but turned 60 over the course of the year, and now won’t be affected when the regulations apply again next year.
  • Group 2 – 3,158 members (801 have MHO)

    These members were abated prior to 25/03/2020, and will be abated again when the regulations apply next year.
  • Group 3 – 4,312 members (828 have MHO)

    These were people who retired after 25/03/2020, who would normally have been abated but were not, due to the changes. These people will be abated when the regulations apply again next year.

The problem was brought up in Parliamentary questions on 10th of January when Labour MP, Gill Furniss asked whether changes to the abatement rules were being considered. In response the Minister of State for Health of UK, Edward Agar said: “The Department will keep this under review.”

Graham Crossley, NHS pension specialist at Quilter: 

“There is a real risk of thousands of doctors and nurses leaving the NHS unless urgent action is taken. Although recent headlines about pandemic have been more positive, there are still significant pressures on the NHS and the prospect of thousands of NHS staff leaving in March to understandably avoid a financial penalty will add to an already challenging situation.

“There is an easy fix to this looming problem. The Coronavirus Act 2020 includes provisions to allow the extension to any of the powers contained within the bill and this issue should be raised urgently in government.

“While it is good to see that this problem is being debated in the House of Commons, Edward Agar’s comment that the department will keep it under review is not good enough as time is running short. Many workers have already received their letters and will need to make their decisions now as to whether they will keep working after 25th March.

“This should be the least that is done to help hard working doctors and nurses continue to battle Covid during one of the worst health crises in a generation.”

Alex Berry

Alex Berry

External Communications Manager