The BMA has started formal steps to request a judicial review into the Government’s ‘unlawful’ handling of NHS pensions, it has announced.
It will challenge the Government’s decision to pass costs related to measures remedying its age discrimination against younger members onto pensions scheme members.
The BMA has sent a ‘pre-action letter’ to the Treasury and Department of Health and Social Care (DHSC), which constitutes the ‘first formal step before requesting a High Court Judicial Review of the issue’, it said today.
The BMA said that it was planning legal action against the Government over the ‘mishandling of NHS pensions’ via an ‘unlawful’ amendment to pensions regulations.
In June, the Public Accounts Committee (PAC) warned that GPs and other members of the public sector pension scheme could be paying for mistakes made by the Treasury for ‘decades’.
But the BMA said members must not be made to pay the £17bn bill for the error, which occurred when the Treasury moved members below a certain age to a new pension scheme without offering any transitional protection in 2015.
Last month, the Government published an amendment that seeks to lift the suspension of its Cost Control Mechanism and include in it the ‘full costs’ of the McCloud Remedy.
The BMA said: [The] UK 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, thereby meaning that these enhanced benefits that they would have otherwise been entitled to will not materialise.’
The BMA said this is not only ‘wrong in principle’ but will also have ‘major implications for the workforce’, who are already being pushed to ‘retire early or reduce their hours’ due to the costs of scheme membership.
BMA pensions’ committee chair Dr Vishal Sharma said: ‘It is unacceptable that pension scheme members are being burdened with the cost of the Government acting unlawfully.’
He added: ‘When Lord Hutton reformed pensions following his report in 2011, he did so giving the public sector a 25-year guarantee that if pensions became too cheap or too expensive against a predefined target – the Cost Control Mechanism – then the schemes would be altered to account for this.
‘The 2016 valuation found that the cost of the scheme was less than had been forecasted resulting in “a cost floor breach”, which should have automatically triggered either an increase in the benefit accrual rate and/or a decrease in member contribution rates.
‘Instead, Government has chosen to use this surplus to fund their own mistake, which is manifestly unfair. It has tried to remedy one injustice – an unlawful act of age discrimination – with another which has no reasonable basis. We will take the strongest action to resist it.’
READERS' COMMENTS [5]
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Not before time.
I retired from the NHS 2 years ago (after 39 years service); but my consequent tax liability is rather larger than the much-publicised “tax free lump sum” so I am obliged to continue working (in private practice) so I can pay the tax on money I have never seen. The option to relax and look after the garden is not available – unless I sell my home to pay the tax.
I’m paying 45% tax on the former (notional) employer contributions to my (notional) pension pot. The pension is taxed on payment at 45% and of course there’s VAT at 20% so ultimately end up paying the government >100% of my earnings. Not a sustainable strategy. The tax bill is effectively 3 years pre-tax NHS pay: ouch.
Of course, the change in the law that brought this about was from the… Conservatives! Naturally they took care to exclude MPs from the same tax trap.
I regret that the BMA’s pensions adviser, from whom I obtained advice, did not see this disaster coming.
I may be wrong but I seem to recall the BMA doing little or nothing at the time and it was only after the judges & firefighters had won their case that the BMA jumped on the bandwagon.
Giles Elrington- I had/have a similar problem. Got a 135k tax bill on retiring two years ago because of sudden increase in pension pot in my finally year from 500k to 1 million due to the annual allowance limit. Complicated story but related to having a mix of officer and GP pension. But this legal case won’t make a difference. Took a drop in pension to pay it through scheme pays.
I did warn people to leave earlier.
BMA seems more concerned with its internal politics than serving the interests of Doctors