Pensions Tax Relief: Employment and Retention

Baroness Altmann Excerpts

Tuesday 1st November 2022 Lords Chamber

[Viscount Younger of Leckie (Con)]

I note what the noble Baroness has said, but, on her point about flexibility, one of the actions that we have taken is extending partial retirement; for example, by allowing more NHS staff to take part of their pension while continuing to work and build further pension rights. We have also extended flexibilities enacted in response to the pandemic by suspending the 16-hour rule, which requires some pension scheme members to work no more than 16 hours per week if they return to NHS employment. So I reassure the noble Baroness that we have taken action, and I am sure that there is more that we can do.

[Baroness Altmann (Con)]

My Lords, I urge my noble friend to go back to the department and look again at the tinkering that has happened to the NHS pension scheme—this will not sort out the problem. The fundamental issue is the way that the annual and lifetime allowances deter extra work and drive early retirement. Although the Government have made commendable efforts to make some adjustments, those underlying problems persist. My noble friend said that this affects only the highest earners, but of course, within the NHS, these are often the most valuable members of staff, whom we need to keep.

[Viscount Younger of Leckie (Con)]

Indeed. The subject of the question was to do with higher earners, but I will broaden my response a little. Public service pensions are a key part of the overall renumeration in the public sector and I acknowledge that it is important to get this right for retention. Reference has been made to nurses. A typical NHS nurse will retire after 30 years with a pension worth over £24,000 per year in today’s money. This compares quite favourably to a private sector employee with similar earnings receiving less than £10,000. As I have said, there is more to do, and we will keep this under review.