Over 1,600 GPs miss out on pension tax compensation due to ‘admin failures’

More than 1,600 GPs are missing out on millions of pounds in pension tax compensation due to ‘administrative failures’, a new data analysis has revealed.

FOI data from NHS Business Services Authority (NHSBSA) gathered by Medifintech, a specialist provider of NHS pension analysis, has found that nearly 4,000 NHS staff will miss out on over £31 million in tax compensation.

It showed that GPs are the largest affected cohort, with 1,628 missing out on compensation. On average, GPs are missing out on £4,451.93, according to the data (see box).

Financial services provider Quilter explained that the issue stems from the 2019/20 Pensions Annual Allowance Charge Compensation Scheme (PAACCS), designed to ‘shield’ NHS staff from pension tax charges caused by annual allowance breaches.

However, despite registering for scheme pays elections, ‘confusing’ guidance has meant many didn’t file the necessary additional paperwork, it said.

The FOI found 3,888 NHS members are set to miss out on PAACCS despite registering for scheme pays elections.

When applying for the compensation scheme, staff had to register both a Scheme Pays election and a separate PAACCS application, a dual-step process ‘many are unaware of’, Quilter said.

It said: ‘Indeed, NHS England’s official PAACCS webpage still lacks updated guidance following the McCloud remedy, further muddying the waters for affected members.

‘Quilter believes the rigid deadline system, with no flexibility to apply retrospectively, fails to account for the complex realities of tax and pension administration.’

Quilter’s NHS pension specialist Graham Crossley said that NHS staff ‘deserve’ a pension system that supports them, not one that ‘penalises them due to administrative failure’.

He said: ‘Thousands of NHS professionals, including frontline doctors, GPs, and nurses, took on extra work despite the tax risks – trusting they would be protected from financial penalties.

‘Instead, they are being denied relief due to bureaucratic red tape, leaving them with avoidable tax bills in a period of unprecedented healthcare strain.’

He said that it is up to the Government and NHS England to now act and ‘repair the damage’ in order to prevent future failings.

He added: ‘We want to see both the deadline for PAACCS abolished and allow members to retrospectively claim for compensation at the time of retirement, giving a significant cohort the outcome they deserve.

‘Furthermore, NHS Pensions must do more to prevent others falling through a similar gap and check that if someone applied for a 2019/20 scheme pays election, to also see if they applied for the compensation scheme. If not, they must proactively communicate with those members.’

An NHSBSA spokesperson told Pulse: ‘Not all members who have made a 2019/20 Scheme Pays application will be eligible for the Pension Annual Allowance Compensation Scheme (PAACCS).

‘Information about PAACCS, including eligibility, is available on the NHS England website. We’re working with NHS England to update information so that members affected by the Public Service Pensions Remedy (McCloud) understand whether they’re eligible for PAACCS and how to apply.

‘Updates will be made to both the NHS England website and the NHSBSA website and we’ll update Employers so they can support their NHS Pension Scheme members with applications for PAACCS.’

Pulse has contacted NHS England for comment.

Earlier this year, the BMA found that one in four GPs reduced their workload this year due to issues related to pension taxation rules, amounting to a potential loss of four million appointments in England.

Last week, an MP and former home secretary slammed the company Capita for operating ‘an extremely outdated and insufficient model’, causing ‘unacceptable’ errors and delays to GP pensions.