Pensions update – details of REC scheme revealed

Just this week, BMA Scotland revealed that the real vacancy rate amongst consultants in Scotland is above 14%. That’s more than double the official figures which still continue to leave out certain types of vacancies and seriously undercount the scale of the issue.

This comes at a time – which is perhaps no coincidence – that our NHS is stretched as never before. We are all truly at our limits.

So, it has probably never been more important to focus on retaining senior doctors in our NHS. If we lose more of them, which is a serious risk given the impact of working conditions and inevitable burnout they cause, then it is only going to compound the pressures on the remaining staff.

On that basis I find it not just mystifying but incredibly frustrating that we still don’t have a full and satisfactory solution to the pernicious pension taxation situation that is driving senior doctors to either cut hours or leave the NHS altogether over fears they will be hit with huge and unexpected bills.

The main levers to solve this sit with Westminster – yet despite the chancellor himself identifying the problem in a previous role – they continue to sit on their hands, shrug their shoulders and bury their heads in the sand. I’m sure that is a mixed metaphor – but all of them are equally true.

In Scotland the Government did finally listen to our repeated calls and in October announced they were devolving powers to the employers to allow the creation of a recycling (reimbursement) of employer contributions (REC) scheme that will be administered locally by boards across Scotland. We were clear when this was announced, it needed to be implemented uniformly, quickly and comprehensively across Scotland.

Today, the details of the scheme the boards will introduce have been communicated to the BMA. We have pushed strongly on this – and have to some extent been successful in our asks. I need to be clear though, that the REC scheme is not perfect – and while introduced relatively quickly after the announcement, it may well come too late for some. You can read the full details below – and also view a sample application form.

On the plus points – the scheme applies across Scotland, will be available to those who have already opted out during this tax year, and payments from the scheme will be backdated to 1st October (when the powers were devolved to employers) – this backdating is something we lobbied for and are pleased to see introduced.

It was also positive that post announcement there has been engagement and relatively quick development. Having a mechanism that means doctors don’t lose out financially from leaving the pensions scheme will no doubt be a help to some. There is no scheme in Northern Ireland – and equally there is serious variation across England.

On the more negative side the proposed scheme excludes consideration of Lifetime Allowance taxation as a justification for pension contribution recycling which seems somewhat counter-productive.  With thousands of senior doctors approaching their LTA, this is just the type of mitigation that could enable them to stay longer in the NHS than they feel able to at present. It’s a huge missed opportunity to ensure that the scheme is as effective as possible at retaining our senior doctors.

We are also disappointed that the scheme doesn’t allow for the full employer pension contribution to be recycled. Currently the contribution from employers is 20.9% of pensionable pay – therefore after employer National Insurance contributions are deducted we advocated for a rate of 18.365%.  However as you will see the proposal allows just 12.4% to be recycled. This is unlike the previous REC scheme where the full contribution, less national insurance, could be recycled, and is frankly unfair given that this is part of doctors’ total remuneration package.  Sadly this matches many of the offerings in England although the reason is slightly unclear given the missing 6% is provided centrally there and thus not available to employers, whereas the full contribution is available to employers in Scotland.

So there are flaws – there is no getting away from it – and I need to be clear they were not agreed with us. Indeed we were very clear that a scheme needed to take a different approach to both these issues. We’ll continue to push on this – but have to work with what we have and acknowledge this a process that will stake some time to get absolutely right.

In that vein, there has been a commitment to review the scheme at the start of each financial year – a welcome signal that it has the potential to keep running year by year. Still, as it is currently constituted, I do have concerns over whether it will deliver what we hope in terms of retention. It is a starting point though and looking at it as an optimist: something is better than nothing.

Watch out for information coming from your individual boards– and speak to the BMA if you do have any issues.

All that remains is for me to wish you the most restful possible festive period – knowing full well many of us will be still be working hard across the next couple of weeks. If you are finding it tough, please do use our wellbeing services. We have a range of services and information to help support you. Our counselling service is open 24/7 to all doctors and medical students – by telephone and in person. It’s confidential and free of charge.

Dr Alan Robertson is Chair of BMA Scotland’s Consultant Committee

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