“This is not the case, as it is still possible for SCS members to perform significant amounts of work without exceeding their abatement ceiling, even for members with long careers.”
All members can work at least half-time when in receipt of benefits before abatement applies, the government claimed.
SCS status was withdrawn for new entrants from March 6 1995 when the NHS Pension Scheme was being restructured.
“In the interests of fairness to all scheme members, it is right that abatement applies to SCS members under normal circumstances.”
‘Just a small fix’
DHSC stated it will lay the final regulations before parliament in time for the rules’ extensions beyond the end of October.
Quilter NHS pensions expert Graham Crossley welcomed the extension of changes to the abatement rules.
“However, while this is a good start, it provides just a small fix to one part of the major workforce retention issues caused by NHS pensions and taxation,” he said.
“We are still awaiting details of the short-term fix that will amend NHS regulations to purportedly fix the ‘[consumer price index] disconnect’, instead of fixing the Finance Act which could have addressed the ‘CPI disconnect’ and ‘negative growth’ for all.
“What’s more, there also remains ongoing concern as to the lack of a long-term fix, such as the BMA’s suggestion of a tax unregistered scheme for senior healthcare workers impacted by pension taxation.”
In August, the Policy Exchange think tank called for a reassessment of the link between CPI inflation and the annual allowance for public sector pensions.
As a result of changes in legislation, when CPI rises, members are assessed for their growth in benefits including inflation. When CPI falls, the annual allowance growth may be negative.
“Negative growth is zeroed and cannot be carried across to other pension schemes within the same tax year or carried back to previous tax years to offset historic tax charges,” Policy Exchange stated.
Alex Janiaud is deputy editor at Pensions Expert, FTAdviser's sister publication
