PARLIAMENTARY WRITTEN QUESTION
NHS: Pensions (16 June 2022)

To ask the Secretary of State for Health and Social Care, what recent assessment his Department has made of (a) the impact of (i) rising inflation and (ii) CPI value on pension taxation for NHS workers and (b) the potential impact of such pension taxation increases on the retention of senior NHS workers.

Asked by:
Feryal Clark (Labour)

The NHS Pension Scheme protects pensions in payment by increasing them by the Consumer Price Index (CPI) and revalues accrued career-average pension benefits by CPI plus 1.5% each year. A higher rate of revaluation will increase the size of pensions and may therefore increase annual allowance pension tax liability in a situation where inflation is increasing. However, when inflation reduces in the subsequent tax year, this may increase the scope for more pension growth before exceeding the annual allowance that year.

The vast majority of National Health Service staff build their pension tax-free. Where pension tax allowances are breached, it is not required to pay the tax charge in advance. The Scheme Pays facility allows staff to meet any annual allowance charge from their pension instead. As an individual may retire or alter their working commitments for a number of reasons, it is not possible to assess the specific impact.

Answered by:
Edward Argar (Conservative)
23 June 2022