NHS England and NHS Improvement (NHSEI) has published more information on the steps it has taken to address the impact of the annual allowance taper for the 2019/20 financial year, including the actions that eligible clinicians and employers now need to take.
In November 2019, NHSEI announced that clinical staff who go over their annual allowance for the 2019/20 tax year and who use Scheme Pays to pay the tax charge can be compensated in retirement for any reduction to their NHS Pension Scheme benefits.
Specifically:
- clinicians who are members of the NHS Pension Scheme and who as a result of work undertaken in the 2019/20 tax year face a tax charge in respect of the growth of their NHS Pension Scheme benefits above their pension savings annual allowance threshold will be able to have this charge paid by the NHS Pension Scheme
- all NHS employers will make a contractually binding commitment to pay a corresponding amount on retirement, ensuring that clinicians are fully compensated for the effect of the 2019/20 Scheme Pays deduction on their income from the NHS Pension Scheme in retirement
The announcement gave assurance to clinicians that they could undertake any combination of clinical roles for the NHS during the 2019/20 tax year, including additional work relating to the coronavirus response, without suffering any financial loss as a result of the annual allowance taper.
NHSEI is encouraging clinicians in England who have received a pension savings statement or believe they may be subject to an annual allowance charge to work out if they have a charge to pay, and follow the steps outlined on the NHSEI website to apply for the 2019/20 Pension Annual Allowance Charge Compensation Policy (PAACCS).
To use Scheme Pays, clinicians must make an application using the Scheme Pays Election (SPE2) form. This must be completed and returned to NHS Pensions by the 31 July 2021 or before retirement or age 75, whichever is earlier. Clinicians and their employing authority will also need to complete an application form available on the NHSEI website to confirm their clinical eligibility.
NHSEI has published a range of employer resources and FAQs on its website to help you support members to access the scheme.
Details of the Welsh application process are being finalised for NHS Wales. We’ll share more information once this is available.