Legal action expected over mishandling of NHS pensions

The British Medical Association is accusing the government of failing to honour key obligations introduced as part of the 2015 reforms to the NHS pension scheme.

According to doctors, this has resulted in those paying into the scheme not building up improved benefits to which they would have otherwise been entitled. It relates to the last pension scheme valuation in 2016 which, far from demonstrating that the NHS scheme was unaffordable, instead showed that members were paying too much for their pension and under the terms of the Cost Control Mechanism were entitled to see their contribution costs reduced, or the benefits they received increased.

Under this mechanism, changes should have been made to automatically increase the benefits and decrease the contributions for members from April 2019. However, the government unilaterally decided to pause the implementation of these changes. The BMA brought legal action against the government relating to this in 2019, but the government is now trying to pass the costs of the ‘McCloud Remedy’ into the previous scheme valuation.

Describing the government’s 2021 Directions to address the issue as ‘unlawful’, the BMA has now written to the Treasury and Department of Health and Social Care. This is the first formal step before requesting a High Court Judicial Review of the issue.

The BMA argues that not only is this wrong in principle to seek to make NHS scheme members pay for the government's mistakes, but that it also has major implications for the workforce. The overall cost of scheme membership due to the combination of the high contribution rates – higher than other public sector schemes and the punitive pension taxation system - is pushing staff to retire early or reduce their hours, all at a time of immense pressure.