Latest pensions update

There has been much happening in the world of healthcare to keep us occupied recently – including the small matter of a global pandemic to cope with.  I have no doubt that has meant for many of us issues like pensions have been put to the back of our minds.

But that certainly hasn’t meant things haven’t been developing, or that the BMA haven’t been continuing to work hard on your behalf. Indeed, there are two important developments I would like to bring you up to speed with in this blog.

Death in Service

First, one of the most important issues we pursued as COVID took hold was a comprehensive death in service pension benefits scheme that would cover all doctors in Scotland, regardless of whether they were in the NHS pension scheme or not. We were successful in that and you can find the details in my last blog on the issue here.

This scheme pretty much delivered on all our asks. Perhaps the only outstanding point was the lack of a guaranteed lump sum pay out – such as the £60,000 made available as part of the version of the scheme introduced in England. I have to say that despite that, our view was still favourable towards the Scottish version of the scheme, due to its comprehensive nature and the fact that lifetime benefits would be available. However, in a very welcome move, the Scottish Government have now confirmed the same payment will be available under the scheme in Scotland. So, in essence the Scottish scheme will now have the best elements of both schemes. I always find writing on this issue something of a contradiction, as I very much hope the scheme will never have to be used as it will only benefit a doctor’s loved ones in the most tragic of circumstances. However, what we now have in place in Scotland should, I believe provide real peace of mind to many doctors, in particular given a second wave of COVID remains a real possibility.

UK Government Consultation – addressing discrimination in public service pensions

On top of that, we have also seen developments in the long running age discrimination case that has been brought against public sector pensions such as the NHS scheme.

You will already be aware that, following its Supreme Court defeat in legal cases brought by the judges and firefighters, the UK Government conceded that the protection it offered to older members when introducing pension schemes changes resulted in unlawful age discrimination against younger scheme members. Similar protection was offered when the 2015 NHS CARE scheme was introduced, and so the BMA brought legal action on behalf of its members, including those in Scotland. This is currently on hold pending a final decision as to how these previous cases will be remedied.

The UK Government has now released a consultation outlining its plans for addressing the discrimination issue across a range of public sector schemes. The SPPA have issued their own circular on the topic – 2020/08.  We have spoken to them and clarified that there are no plans for a separate consultation in Scotland, as the powers to address the remedy are through primary UK legislation and thus remain a largely reserved issue. The consultation proposes that all affected scheme members be offered the choice of being in either their pre-2015 scheme (1995 or 2008) or in the 2015 scheme for what is being called the ‘remedy period’, from 1 April 2015 to 31 March 2022, at which point all scheme members are likely to move to the 2015 scheme, however this time with no protection arrangements in place.  You will recall that it was not the 2015 scheme itself that was deemed illegal, but rather the protection arrangements that were put in place upon transition to it.

One of the key questions posed in the consultation is when should members choose which scheme they wish to be in during the remedy period? Should it be an immediate choice, made in April 2022 or a deferred choice made when they retire?  The benefit of this latter option is that members will know which scheme provides the better financial outcome for the remedy period as they will be at the end of their NHS careers and will be provided with comparative estimates. These comparative calculations will clearly be hugely complex (especially considering the different tax situations depending upon which scheme is chosen for the remedy period), but we will be making clear that is a problem for the Government and HRMC to deal with.

As you can imagine, the BMA pensions committee has been doing extensive work on this topic. As well as the reduction in pension and increase in retirement age mentioned in the consultation above, it has identified a number of additional ‘detriments’ that may be suffered by members as a result of being moved on to the 2015 scheme. These include doctors who have overpaid annual allowance tax, lost their mental health officer status, cancelled ‘added years’ contracts, switched to the 2008 scheme because of the imposition of the 2015 scheme as well as a number of other potential detriments.

This is no doubt a complex area, the BMA will be making a full response in due course but you are of course also welcome to make a submission as an individual if you wish – the deadline is 11 October 2020.  We will of course also continue our legal cases throughout the UK to ensure members are fully supported.

Clearly on the age discrimination case there is still some distance to travel and I’ll continue to keep you updated.

Alan Robertson is the BMA Scotland rep to the BMA Pensions Committee, and deputy chair of the Scottish Consultants Committee

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