NHS Pensions

Thursday 3rd April 2025 Lords Chamber

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Tuesday 1 April.

“I thank the honourable Member for Hinckley and Bosworth, Dr Evans, for asking this Question, which gives me the opportunity to provide further information following the Written Parliamentary Statement that I issued yesterday to update the House on the delivery of remediable service statements to affected members.

I have extended the deadlines for the NHS Business Services Authority to issue statements to ensure that members have enough time to make informed decisions. Once members have received statements, they will be able to use a tool provided by His Majesty’s Revenue and Customs to retrospectively adjust their annual allowance between 2015-16 and 2022-23.

Separately, the original deadline to issue the 137,000 remediable pension savings statements was 6 October. The NHS Business Services Authority issued statements to 57,000 members by this deadline, of which 23,000 were found to contain incorrect information; these have since been recalculated and reissued. The NHS Business Services Authority is working to issue outstanding statements as quickly as possible.

A revised delivery timetable has been developed and shared with trade unions and employer representatives. By the end of March, 106,000 statements had been issued. Statements for 11,000 members will be produced once further information has been received from their employers. The remaining 20,000 statements require additional manual input from the NHS Business Services Authority before they can be produced, and will be issued in July. There have been delays on all sides, which we have been aware of since last July. In fact, the department had escalated issues of design with the previous Government, as I am sure the honourable Gentleman understands.

We know that this matter is really important and that there are high numbers of high earners in the NHS, which is why we have taken the decision to be open and transparent about the timeline that we can now commit to, having worked tirelessly to reduce the delays. Although these delays will cause inconvenience to some members, I have been crystal clear that no one will face any financial detriment as a consequence. Compensation arrangements are in place for direct financial losses, certain HMRC interest charges, and the costs of financial and accountancy advice.

The Government do acknowledge the impact of the delays on affected members. We are working hard to issue outstanding statements and to protect members from any financial detriment the delays may cause”.

11:48

[Lord Kamall (Con)]

My Lords, in the other place, in response to a question from the honourable Member for North Shropshire, the Minister there said:

“HMRC has also confirmed that self-assessment late filing penalties will be waived on appeal in certain circumstances where a member receives a delayed pension savings statement as a consequence of the implementation of the McCloud remedy”.—[Official Report, Commons, 1/4/25; col. 166.]


One of the frustrations that people sometimes have when dealing with government or large organisations is that their advice is not always clear. I want to ask the Minister two questions. Can she explain to your Lordships the specific “certain circumstances” where the penalty will be waived, and can she explain the thinking behind the Government deciding not to waive the penalty for everyone affected, given that responsibility for delays is with the NHS and not with those affected?

[The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)]

It may be helpful if I respond to the noble Lord by saying that a compensation scheme is already in place to cover direct financial losses, certain HMRC interest charges and the costs of financial and accountancy advice. On the specific point that the noble Lord raises, I will be very pleased to answer further on the response of my honourable friend in the other place.

It is also important to remember that this arises from a reform to public service pension schemes in 2014 and 2015 under the coalition Government. As part of those reforms, older pension scheme members were given protections enabling them to stay in legacy schemes, but younger members were moved on to reformed schemes. Therefore, legal cases were brought, and the Court of Appeal found against the then Government. We are dealing with an inherited situation, and we are working at pace to get the right things to people, but also in order that people do not lose out.

[Lord Scriven (LD)]

First, I have to declare an interest as a member of the NHS pension scheme. To be helpful, will the Government look at taking two urgent measures to help alleviate some of the problems that the late delivery of these statements has caused? The first is to extend the carry-forward rules from three to five years, and the second is to provide an immediate remedial service statement for those needing transitional tax-free amount certificates. If the noble Baroness cannot answer in full, a written response would be welcome.

[Baroness Merron (Lab)]

I am very glad that the noble Lord has given me that option, which I will gladly take. Perhaps it would be helpful to your Lordships’ House for me to say that the deadline to issue remedial service statements was 1 April or later. That was not achievable because of the level of technical complexity, capacity, and delays in HMT and HMRC setting out lower-level policy requirements under the previous Government, so Minister Karin Smyth extended this deadline last week and published a new timetable. Separately, 137,000 higher-earning members of the NHS pension scheme require remedial pension savings statements as part of their remedy. The deadline for that was 6 October. HMRC did not allow this to be amended. The current position is that, to date, 94,012 statements of the 137,000 have been issued. These delays are due fundamentally to the annual allowance element of the remedy being poorly designed and, again, late requirements provided by HMT and HMRC. To say that this is a knotty problem would be underestimating it.

[Baroness Watkins of Tavistock (CB)]

I thank the Minister for the assurance in the Statement that no individual member will in the long term suffer financial detriment. However, is she able to explain how the NHS Business Services Authority issued 23,000 inaccurate statements against 57,000, which is over 30%, and what are we doing to get efficiency and effectiveness from this authority?

[Baroness Merron (Lab)]

I appreciate the point that the noble Baroness refers to. The priority is to get this matter resolved, as she will appreciate. With respect to the NHSBSA, we will also be working closely with it to ensure that the correct service is given in future. Obviously, I want to see this put right to assure people as soon as possible.

[Lord Davies of Brixton (Lab)]

I thank my noble friend for her further clarification of the issues here. This is an extremely complex issue, and I know that better than most because I was involved in the original negotiations, going back to 2011.

What was disappointing about the discussion in the House of Commons on this issue was that there was overemphasis on working out who was to blame rather than on achieving a solution at pace. I thank the Minister here for focusing. Can she give an assurance, first, that everything is being done to resolve this situation? There is also the issue of the way in which the Statement is worded, referring specifically to financial loss. Those people have had to suffer high levels of uncertainty and delay in making their arrangements, which is not easily captured in the term “direct financial losses”. They will be significantly concerned about that lack.

Finally—I feel some sympathy for my noble friend—this is an issue that runs across all the public service schemes. Similar problems are arising in other schemes, not quite to the same extent, but there is failure there. Does my noble friend agree that this illustrates that any changes to public service pensions need to be considered extremely carefully, before we end up with similar problems down the line?

[Baroness Merron (Lab)]

I certainly agree with my noble friend. This runs across all public service pensions. Indeed, it is not just the issue of pensions but the administration and support given. To the point raised by both my noble friend and the noble Baroness, Lady Watkins, I should add that the NHS Business Services Authority and the department are in regular contact with the Pensions Regulator on delivery.

I can certainly give the assurance to my noble friend that we are working cross-government to ensure that these difficulties are corrected as soon as possible. I absolutely recognise the inconvenience, uncertainty and potential distress that have been caused to individuals. As I say, this has a root in it being discriminatory from 2014-15. That said, it falls to us to put that right.

[Baroness Altmann (Non-Afl)]

My Lords, does the noble Baroness agree that at the heart of this problem is the complexity of our pension system and the tax rules, which have undermined the generosity of public sector pensions, which are meant to be a really generous benefit but have turned into a hugely unwelcome cost for our most senior medical staff and nursing staff, as well as others in the public sector? Is she looking, at the same time as trying to correct some of these errors, at finding other ways of improving the problems in the scheme, which will remain even after the statements are issued, such as doctors and nurses themselves having to go on to an HMRC tool to retrospectively adjust their annual allowances for the various tax years going back all those years? Will there be consideration of addressing the cost of scheme pays? Has consideration been given to providing independent financial advice for senior members of the scheme, who would then have some comfort that what they are frightened of—and is driving early retirement or stopping overtime—is either unnecessary to worry about or can be dealt with in another way?

[Baroness Merron (Lab)]

I very much value the noble Baroness’s expertise in this area, so I particularly value her acknowledgement of the complexity of the scheme. Certainly, in our efforts to support the workforce, we consider all matters to make working for the NHS better and simpler. There has been talk—the noble Baroness did not quite say this—that pension issues are impacting NHS activity. There is no evidence of that. Nor is there any clear evidence from NHS payroll data that pension tax rules limit the activity of, for example, the consultant workforce overall. All that said, I, as ever, will be pleased to take away the suggestions that the noble Baroness makes and to have them looked into.