The government is extending the deadline for NHS staff to apply for their pension tax bills to be taken out of their pension fund as opposed to paying it upfront, HSJ has learned.
The Department of Health and Social Care has confirmed NHS Business Services Authority is making arrangements to extend the voluntary “scheme pays” deadline until March 2023. Staff previously had until the end of July 2022 to apply.
This is the third consecutive year the deadline has been pushed back. It was extended in the two previous years to encourage staff to take on extra hours – despite the risk of a higher pension tax bill – during the coronavirus pandemic.
The move follows calls to extend measures brought in during covid.
In a response to Graham Crossley, an NHS pensions expert at wealth management firm Quilter, who had called for the extension, the DHSC said: “The department has listened to concerns from stakeholders that an extension to the voluntary scheme pays deadline for the 2020-21 tax year is required.
“The previous deadline for this had been 31 July. The department can confirm that the NHSBSA is making arrangements to extend the deadline to 31 March 2023. Further information will be made available on their website in due course.”
Under scheme pays, NHS pension members can opt to have their pension tax bills paid on their behalf out of their scheme – in return for smaller payments once they start receiving their pension – rather than paying the tax bill upfront themselves.
Due to the way tax rules interact with the NHS pension scheme, some staff have found themselves unexpectedly receiving bills for several thousands of pounds.
Mr Crossley said it was “sensible and pragmatic” move, but felt NHS staff “urgently need solutions” to the pension rules that are affecting workforce retention.
He said: “There have been welcome murmurings that, if Liz Truss is to become the next prime minister, one of her first priorities will be to ”sort out” the issues with doctor’s pensions. However, care will be needed to ensure that any solutions are truly fit for purpose.
“As is always the case the devil is in the detail and any plan needs to ensure that it does not produce unintended consequences that further muddy the water of what is an incredibly complicated system.”
Last month, HSJ revealed the NHSBSA, which administers the NHS pensions scheme, was struggling to process applications on time following a 50 per cent increase in retirements from the service.