Thousands of NHS workers face losing out on £1,000s in retirement after huge pension error

THOUSANDS of NHS workers face losing out on £1,000s after a massive pensions blunder.

The NHS Authority, which manages workers' missed a key deadline, resulting in around 14,600 doctors not being able to plan their pensions.

It needed to have issued statements to workers by April 1, the statutory deadline.

These statements, known as “remedial service statements” and “remedial pension savings statements”, show workers the value of their pensions and any they have.

For example, the statements outline whether doctors have any “annual allowance” – the amount you can contribute tax-free to a pension each year (currently £60,000) – left to use.

If you have leftover annual allowance from the past three years, you can use a scheme called “carry forward” to use it in the current tax year instead – but you need to know in order to make that choice.

By missing the deadline, thousands of doctors have been left in limbo and unable to make crucial choices about their which could leave them out of pocket down the line.

Around 14,646 GPs and consultants could potentially be impacted by the delays, according to a letter sent to City minister Emma Reynolds by Quilter, seen by Flying Eze.

Graham Crossley, NHS expert at Quilter, explained in the letter: “The delays have led to missed opportunities for members to make informed pension contributions.

“Without timely access to their [statements] many individuals have been unable to determine their carry forward position.

“As a result, some have hesitated to contribute to their pensions—only to later discover they had unused annual allowance that could have been used.

“In cases where that unused allowance dates back three tax years, the window to utilise it has now permanently closed.”

He added that doctors could end up paying unnecessary extra tax because of the delays, further leaving them short of .

This is because a technical document called a Transitional Tax-Free Amount Certificate, which accurately determines how much tax-free benefits you have taken.

Without this, doctors may end up paying extra tax when they didn't need to.

Given senior NHS consultants typically earn up to £131,964, according to the NHS website, the losses could be in the thousands of pounds.

Mr Crossley told Flying Eze: “We are disappointed in the delays surrounding the delivery of remediable service statements for affected NHS Pension Scheme members.

“These delays have made financial planning difficult for many individuals, the uncertainty has led to missed opportunities to use full allowances, and these opportunities are lost unless the government introduces exceptional measures, such as extending carry forward rules to five years instead of three.”

What is the issue with NHS pensions?

Around 2015, the government reformed public sector pension schemes to move them from being so-called “final salary” schemes to what are known as “career average” schemes.

Public sector are typically “defined benefit” schemes, which means they guarantee workers a fixed income in retirement based on the length of their service and their salary.

The reforms aimed to reduce costs, making the schemes “better balance the interests of public service workers, employers and taxpayers.”

But when the changes were made, they provided “transitional protections” which allowed savers who were closer to retirement age to remain in the previous “legacy” schemes rather than move to the new ones.

However, a landmark judgement in 2018, known as the McCloud judgement, found that this was age discrimination, and a remedy was brought in for the period of discrimination for younger doctors.

This set out that savers would get a choice of pension benefits for the affected period, and they would get a statement explaining how each choice would affect their pensions.

This meant they could decide how they wanted their pension-related protections and benefits to be applied.

The legislation requires that a “statement” is provided to each affected member on or before 1 April 2025, or as reasonably close as possible.

This is the deadline that has been missed, meaning many affected doctors have not got the information they need to make informed decisions about their pensions.

As a result, they could face extra tax liabilities or a loss of money in retirement as the uncertainty means they haven't topped up their pensions or used their pension annual allowance.

In a written statement to last month, Ms Karin Smyth set out new deadlines from between July and October for receiving these statements.

She said: “The production of remediable service statements involves a complex and challenging programme of work.

“Technical complexities, some of which extend beyond the NHS Pension Scheme, have affected delivery timelines for statements.”

Since, she has insisted that the government will compensate anyone who directly loses out financially as a result of the delays.

“The government do acknowledge the impact of the delays on affected members. We are working hard to issue outstanding statements and to protect members from any financial detriment the delays may cause.”

What's next and what to do if you're affected

The government has said it is considering compensating anyone adversely affected by the delays, but experts have warned it may be difficult to know the damage until later.

Mr Crossley has urged the government to consider “urgent measures” to minimise the impact.

“We urge the government to consider urgent measures, including extending the carry forward rules and providing immediate remediable service statements for those needing transitional tax-free amount certificates,” he said.

“These steps are crucial to ensure that affected members can make informed decisions about their pension benefits without further delays.”;

For anyone affected, contact the NHS Business Authority for an update on when you will get your statement and whether you can get any compensation if you are financially affected by the delay.

Consider speaking to a financial adviser if you need technical help with your pension. These are professional experts who can ensure you're in the best position possible.

Other major pension errors

Pensions are often affected by administrative errors that can have devastating effects on savers' finances.

The the DWP is currently grappling with several underpayment issues relating to the state pension.

Thousands of women were recently warned they could be missing out on thousands of pounds in their pension pot due to a “common error” from their employers relating to

And last year we exposed how a landmark court case had found a number of employers signed off when they should have, potentially resulting in workers losing out in retirement.

We also revealed a plot to track down thousands of savers who lost a protected benefit known as a Protected Pension Age unwittingly after a blunder by schemes.

If you are unhappy with your treatment by your pension provider, you may be able to complain to the Financial Ombudsman Service (FOS).

Speak to your provider first and make a formal complaint, and then if you cannot reach an agreement, escalate it to the FOS.

Visit: financial-ombudsman.org.uk/make-complaint to get started.

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