Hospital Dr News

BMA plans legal action against Government over mishandling of NHS pensions

The BMA is accusing the Government of failing to honour key obligations introduced as part of the 2015 reforms to the NHS pension scheme.

The union claims this has resulted in doctors not building up improved benefits to which they would have otherwise been entitled.

This 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, 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.

These costs relate to the measures required to rectify the Government’s unlawful age discrimination against younger members when they implemented the changes to public sector pension schemes in 2015.

In essence, having been found guilty of unlawful indirect age discrimination, the Government is attempting to pass the costs of its mistakes onto scheme members, the BMA says, meaning that these enhanced benefits that they would have otherwise been entitled to will not materialise. 

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 letter challenges the Public Services Pension and Employer Cost Cap Amendment in which the Government intends to lift the suspension of the Cost Control Mechanism, but to include in it the full costs of the McCloud Remedy.

In effect, making NHS Pension Scheme members pay for the age discrimination flaw which the Government should itself have resolved years earlier.

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 and the punitive pension taxation system is encouraging staff to retire early or reduce their hours.  

No right to withold benefits

Dr Vishal Sharma, BMA pensions’ committee chair, said: “It is entirely wrong in principle that the Government is passing the costs of remedying age discrimination, for which it and it alone was responsible, onto NHS pension scheme members.

“Had it acted lawfully in 2015 when reforming the NHS pension scheme and other public service pension schemes, then there would have been no McCloud judgement, and no need for a remedy that the Government is now proposing that scheme members pay for. This is an entirely separate issue to the cost control mechanism and there is no rationale for the Government to seek to withhold the increase in benefits that NHS scheme members were entitled to.”

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