KPMG in the UK's Pensions Partner, Steve Simkins comments on proposed changes on NHS pensions.
Steve Simkins, Pensions Partner, KPMG said:
“The move towards greater flexibility in the NHS Pension Scheme to allow doctors to limit their Annual Allowance charges will be welcomed. In particular, the potential step to balance a reduction in pension accrual with a taxable cash payment in lieu of pension is significant and consistent with the government’s intention to limit pensions tax relief.
“This is a problem that has been brewing for a number of years and there is no easy solution as two regimes have come to a head - either the pensions taxation system needs to simplify or public service pensions schemes need to become more flexible. There are significant wider challenges with both, but on balance we believe this problem can be resolved through the schemes themselves.
“Changing the NHS Pension Scheme so that it is fair for everyone – not just clinicians, but also other NHS leaders and lower paid staff – will not be straightforward. It is appropriate for everyone to benefit from greater flexibility which the Treasury will need to balance against a potential loss of cash flow. However, the administration and communication challenges should not be underestimated.
“This is a wider issue across public services, not just the NHS, and so other public service schemes should be looked at in the same context.”