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Quilter calls for review of scheme pays deadline

Date: 17 December 2020

17 December 2020

Quilter is today calling on the government to review the NHS scheme pays deadline which is causing unnecessary strain on the medical profession.

In an open letter to the Chancellor, Secretary of State for Health and Social Care and Economic Secretary to the Treasury, Quilter has asked for the rules to be amended so members can make retrospective NHS Scheme Pays elections within a 4-year time period. Currently those who have historically made an election can amend that election within a 4-year time period.

This follows a letter issued to Government earlier this year calling for an extension to the 2018/19 NHS Scheme Pays deadline, which was subsequently extended to 31st March 2021. The impact of the pandemic will be felt for a considerable time so it is vital the NHS are granted the time they need to make the 19/20 deadline.

On top of this, the NHS England & NHS Wales Annual Allowance compensation schemes require clinicians to complete a scheme pays election form in order to qualify. It is likely that a number of members, GPs in particular, will not even find out about their 2019/20 annual allowance liability until after the existing 31st July 2021 scheme pays deadline and so they will want to ensure that they don’t end up potentially missing the agreed compensation scheme.

There is an added complication where, as a result of the McCloud judgment, there could be NHS Pension members that may not have a liability now, but will do retrospectively.  

Scheme pays allows savers to settle annual allowance tax charges of more than £2,000 through the pension fund without needing to find cash upfront. While the Budget lifted the ‘adjusted income’ and ‘threshold income’ levels under the Tapered Annual Allowance by £90,000 for the 2020/21 tax year, there is still a legacy of annual allowance issues for many doctors.

Graham Crossley, NHS pension specialist at Quilter:

“There is already a substantial population of doctors who are only now realising that they have annual allowance liabilities for historic tax years. As the NHS Scheme Pays deadline has passed for those tax years, doctors have fewer options to settle the annual allowance charge and some are having to resort to taking on significant debts. With the NHS Annual Allowance compensation scheme for 19/20, it is now more important than ever, that members are given ample time to submit the necessary forms.

“This is an absurd scenario that penalises hardworking medical professionals and it needs to be rectified. Allowing members of the NHS pension scheme to make a scheme pays election within a 4-year time period is an easy fix.”

Jon Greer, head of retirement policy at Quilter adds:

“Annual allowance bills can be astronomical for some. We know that because of the way the annual allowance is calculated for defined benefit scheme members, many have found that they are penalised with annual allowance tax charges and have opted to reduce hours, creating staffing challenges.

“An overhaul of the annual allowance would be desirable but is unlikely in the current environment and so an swift amendment to the NHS Scheme Pays Election would go a long way to support this population and avoid some of the detrimental impacts of the policy.”

For more information contact

Tim Skelton-Smith

Tim Skelton-Smith

Head of External Communications