Chief secretary to the Treasury Steve Barclay told Parliament this week he planned to introduce a DCU (deferred choice underpin) remedy with new legislation as soon as he could. This was the option the BMA urged ministers to adopt in its response to a consultation paper last year.
The Department for Health and Social Care conceded in 2019 that the inclusion of transitional provisions for older members at the time of the imposition of the 2015 NHS pension scheme had unlawfully discriminated against younger members.
Under these provisions, protection was offered to older members – those between 10 to 13.5 years of retirement in April 2012. This allowed these older members to remain on the 1995/2008 final salary scheme rather than be forced to join the 2015 pension scheme, which for many was a less favourable pension.
As a result of this, younger doctors potentially suffered not only a reduction in their pensions but an enforced increase in the age at which they could retire compared with their older colleagues.
Space to decide
Under DCU, at the point of retirement, members can choose whether the previous ‘legacy’ or reformed 2015 scheme is applied to their pension for the period between 1 April 2015 and 31 March 2022.
The Government agrees with the BMA’s position that delaying the decision to the point of retirement, allows doctors to make decisions about their pension when they are more certain of their personal circumstances.
BMA pensions committee chair Vishal Sharma (pictured above) said the association and thousands of its members had backed the ‘common-sense’ DCU option.
‘It was clear that action was needed to rectify this, and now the Government has listened to the BMA and its members in choosing the DCU option,’ he added. ‘The NHS pension scheme is incredibly complex and doctors’ career progression can be unpredictable, meaning it’s impossible to know for certain which scheme is most suitable if making the decision decades away from retirement,’ said Dr Sharma. ‘The same applies for doctors in the armed forces.’
However, the Government have not gone far in enough in addressing the BMA’s concerns. The BMA’s response to the consultation paper was clear – this age discrimination resulted from the Government’s actions and no doctor should be expected to shoulder the cost of any remedy to fix to the discrimination.
In particular, the costs should not be borne by scheme members, and members should not have to pay for complex financial advice to navigate the already ‘exceedingly complex’ pension rules and the proposed remedy. The BMA is therefore concerned by the suggestion that the costs of this remedy will feed into historical scheme valuations, rather than be met outside the scheme.
The association also remained concerned that the Government’s planned fix fails to offer adequate protection to doctors who have already made consequential decisions about their pension on the basis of the unlawful discrimination that they experienced.
‘Doctors may have opted out of the scheme, taken early retirement, cancelled added years contracts or decided to work part-time. All of these will have had with knock-on effects to their pension entitlement and they may not need to do this had they been able to remain in their legacy scheme,’ Dr Sharma added.
‘The Government has said that these decisions will be assessed on a case-by-case basis, requiring doctors to prove that these decisions were made as a result of the discrimination.
‘Indeed, doctors are by far the largest group or workers that will have incurred annual allowance tax bills during the remedy period and as a result, face by far the most difficulty in working out what is best for them.
This further highlights how unsuited the annual allowance is in defined benefit schemes such as the NHS. Scrapping the annual allowance in defined benefit schemes will simply the remedy and help doctors to focus on caring for patients rather than dealing with this administrative burden.’
The BMA is working on a detailed response to the Government’s proposals and is planning a series of webinars to explain the proposed changes to members.