Taxpayers on the hook for ‘multi-million pound' bill after NHS pension delays
Pensioners have already waited months for vital paperwork to tell them how much they should be receiving, but many could now be due compensation for underpayments following a series of missed deadlines.
The NHS Business Services Authority (NHSBSA) was required to send 382,000 pension statements by March 31, but ministers had to announce a new timetable after just 21 were actually issued.
Health minister, Karin Smyth, has now confirmed that another set of extensions is required after just 1,338 more statements were sent over the next three months. This has left more than 380,000 statements outstanding, despite the allocation of extra staff.
She also confirmed that the Government would add 8pc interest to any underpayments, which Alec Collie of advisors Wesleyan, said 'could run into the millions'.
Shadow health minister, Dr Luke Evans, warned the failure had 'real consequences', and said NHS patients had been left to pay for Labour's choices.
The problems stem from the 2015 changes to public sector pensions, including the NHS scheme, amid fears they had become unaffordable.
Workers were moved away from gold-plated final salary pensions and into schemes based on their average earnings. However, the implementation was ruled to be age discriminatory following legal action from members of the judges' and firefighters' schemes.
As a result, retirees were offered a choice between both schemes for their service between 2015 and 2022 under the so-called 'McCloud Remedy', which was already expected to cost taxpayers £17bn.
Those affected should receive a remediable service statement, which outlines the choice between both schemes, and gives them 12 months to decide.
The original delivery date of March 31 was set out in legislation, but Ms Smyth has repeatedly appeared in the House of Commons to confirm that numerous deadlines had been missed.
As a result, the retirees affected won't know the true amount of their pension until their statement arrives, and many could be receiving less than they're entitled to. Any funds owed will be back paid with an additional 8pc in interest – around double the current interest rate.
Mr Collie said: 'These situations won't just need to be remedied by the Government – the 8pc interest will also need to be paid.
'We can't say for sure how much it's going to cost in total because the circumstances will be so unique to each person. But what's for sure is that the nature of the McCloud process means this is likely to roll on for many years to come – it's not going to be a 'one and done' settlement.'
Ms Smyth said that she had met NHSBSA's chief executive, Michael Brodie, to express her disappointment, and ordered an independent review from Lisa Tennent, who serves as independent chair of the NHS Pension Board.
The disarray comes amid repeated delays to remediable pension service statements, which outline how much staff may have actually paid into their pension once McCloud changes are taken into account.
The statements help doctors, who often also work privately, to track their income and avoid a tax charge by exceeding the annual £60,000 limit on contributions. Just £1 of additional income can generate a £22,500 tax bill in some circumstances.
The NHSBSA was supposed to send 137,000 statements to staff by October 6 last year, but at least 34,000 were still outstanding by June 2. It admitted that the true figure was not available because the data was still being collated.
Experts have already warned that doctors are turning down work to avoid potential tax bills, with knock-on effects for frontline care.
Dr Evans said the Government was continuing to miss legal and self-imposed deadlines, leaving patients to pay the price.
He said: 'Labour admit that their plan is failing, but offer no serious way to resolve it.
'This failure has real consequences. Senior doctors are turning down extra work for fear of unexpected tax bills running into thousands. Vague promises and talk of 'conversations with the board' won't cut it.
'As a result of Labour's choices, patients will pay the price – especially if senior doctors won't step in during strikes.
'Labour must urgently set out a clear delivery plan to resolve both delays and hold the NHSBSA to account. With a summer of strikes looming, the complacency from Labour is both telling and dangerous.'
An NHSBSA spokesman said: 'We appreciate that this news will be disappointing for NHS Pension Scheme members affected by the McCloud Remedy.
'We apologise for the delays and assure our members that we are working hard to deliver remediable saving statements as quickly as possible.'
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