Government delays ‘partial retirement’ pension reform

Ministers have been accused of scoring a ‘massive own goal’ by delaying a proposed NHS pension reform – seeking to reduce tax hits on high-earners – by six months.

The “partial retirement” plan — which would allow staff to draw their pension while continuing to work and build an additional pension — was announced as part of a package in September by the then health and social care secretary, Therese Coffey.

It sought to mitigate the problem of NHS staff, mostly high-earners, including doctors, other clinicians and managers, receiving large and often unexpected tax bills due to the value of their pensions.This is leading to some reducing their hours, declining overtime and retiring early.

A consultation launched in December said changes would come in from April.

However, the British Medical Association announced yesterday it had been confirmed the change was now being targeted for October instead. 

Under the plans, members aged 55 and above would become eligible to partially retire if they reduced their pensionable pay by 10 per cent.

The BMA’s pensions committee has criticised the move as a “massive own goal”.

Vishal Sharma, chair of the committee, told HSJ it was essential the reform was implemented “as soon as possible”.

Dr Sharma added: “Given current pressures in the NHS it is scarcely believable that the government have delayed implementation until October 2023.

“This is far too late and could result in thousands of doctors taking their full retirement this year and it may not be possible to persuade them to return in the future.”

The Managers in Partnership trade union described the delay as a “major concern” as people may decide to retire without continuing to work in the NHS.

Jon Restell, chief executive of MiP, said: “We need either partial retirement from 1 April or a mitigation that puts staff in the same position until October.

“With the care backlog where it stands, this issue requires an urgent intervention.”

Meanwhile, Graham Crossley, an NHS pensions expert at the wealth management firm Quilter, was also critical of the delay at a time when the health service is “creaking under significant pressure”.

He said: “While six months might seem like an inconsequential amount of time to some, many members were looking forward to this policy so they could transition their retirement gradually, easing their workload but still continuing to work without having to renegotiate potentially less favourable terms of employment.

“Unfortunately, the delays to this policy might represent a bridge too far, with some members looking to throw in the towel and take full retirement.”

A Department of Health and Social Care spokesman said employers and the scheme administrator have asked for additional time to prepare for staff who want to take advantage of the “partial retirement option”.

He added the changes to the NHS pension scheme will support clinicians who “wish to remain in work for longer as they approach retirement age”.

UPDATED: This article has been updated to include comments from the BMA, MiP and the Department of Health and Social Care