Government launches consultation to overhaul NHS pension scheme

16 September 2019

Following the recent controversy surrounding NHS pensions which revealed widespread opt-outs and workers cutting their hours, the government has now announced plans to overhaul the NHS pension scheme by giving staff more flexibility in their retirement planning. 


The suggested changes would allow NHS workers to choose how much income they want in retirement and to adjust their contributions accordingly.


The relative generosity of the NHS Pension Scheme means that for some staff, mostly senior doctors, changes since 2010 to the way that wider pensions taxation works has resulted in their pension now growing to a level beyond their tax-free allowance. A tax charge is levied on the value of pension growth that exceeds the tax-free allowance.


This is causing significant financial concerns to those doctors, with many now looking closely at whether it is in their financial interest to do extra work for the NHS. For some, the potential impact of the tax changes is prompting them to consider retirement or withdrawal from the NHS Pension Scheme.


The government has published a consultation which sets out proposals to offer senior clinicians more control over their pensions growth, so they can continue to provide the services that patients need.


The new plans go significantly beyond the 50:50 flexibility previously proposed. The new proposals include:


  • a ‘flexible accrual’ option where members can choose an accrual level in 10% increments

  • the option to ‘fine tune’ pension growth towards the end of the scheme year, when total earnings are clearer.


The NHS Pension Scheme is a statutory scheme, so any changes require legislation and significant amendment to pension administration and payroll systems. Accordingly, the earliest changes can be made is in time for the next tax year.



The CIPP will not be issuing a survey but interested members can respond to the consultation directly through GOV.UK.