This frequently asked questions are designed to give employers an overview of some commonly asked questions in respect of the Policy, its benefits and how clinicians who are members of the NHS Pension scheme apply for them. For full information on the Policy clinicians and their employers should read the information available on our website.
Last updated: 7 July 2022.
The Policy compensates eligible clinicians in retirement for any 2019/20 pensions Annual Allowance charges which they choose to meet using the NHS Pension Scheme’s ‘Scheme Pays’ mechanism.
Under the scheme pays mechanism, any Annual Allowance charges are met through a deduction to the member’s pension (or lump sum, if applicable) at retirement. The policy will make payments to eligible clinicians in retirement to offset reductions to their pension due to using scheme pays to meet annual allowance charges for the year 2019/20.
The full eligibility criteria are set out on our website.
Importantly for individuals to be eligible they must be employed or engaged in a clinical role that requires registration with an appropriate healthcare regulatory body during the 2019/20 tax year, see: Professional Standards Authority – Which professions are regulated.
You will not automatically know which of your clinical staff may be eligible for the Policy as you will not know about any private income they may have. This can reduce their Annual Allowance, and result in them having a charge. We only need you to endorse the eligibility of employees who approach you from a clinical perspective (see below).
Many members who are likely to incur an Annual Allowance charge from the increase in value of their pension will automatically receive a Pension Savings Statement for 2019/20 from the NHS Business Services Authority (NHSBSA) before 6 October 2020. Receipt of the Pension Savings Statement may prompt clinicians to:
- Check whether they are subject to an Annual Allowance charge and submit a scheme pays election to NHSBSA (which they had to do no later than 31 July 2021 for mandatory scheme pays and by 31 March 2022 for voluntary scheme pays); and
- Contact you to endorse the application form in respect of the Policy (see below).
Please note that not all clinicians who may be liable for an Annual Allowance charge will have automatically received a Pensions Savings Statement prior to 6 October 2020. If these clinicians are expecting to have an Annual Allowance charge for 2019/20 (for example, because they had one previously) they should consider submitting an estimated scheme pays election as soon as is practicable and complete a Policy application form to ensure that they don’t miss out.
There are four key actions for employers, described below.
1. Issue a letter to clinicians setting out the offer that is being made by NHS England (if you have not already done so)
NHS trusts: NHSE has previously provided you with a letter to provide to individuals who may be eligible for the Policy. The template letters are available here.
Higher Education Institutions: UCEA has previously provided you with a letter to provide to individuals who may be eligible for the Policy (notably, clinical academics).
GP and Dental practices: NHS England and NHS Improvement has previously provided you with a letter to send to all eligible GP partners and practitioners. NHSE has published a letter for Dental practices with these FAQs
- GP Practices – the template letters are available
- Dental Practices – the template letters are available
Independent sector employers: If you have eligible clinicians and you would like to offer the Policy a template letter can be found here.
Please note that these letters to clinicians do not need to be in the form of an individual letter; and can be emailed to all clinicians who could be eligible. However, if letters/communications are not issued there is a chance that eligible clinicians miss out on the Policy’s benefits.
You may also wish to contact recent retirees to tell them that they can now apply for the compensation policy, pointing them to the NHS England website. Those that are high earners will already know that, if they wish to make a scheme pays election, they should endeavour to do so before they draw their pension (and will have to have done so already if they wanted to take advantage of the compensation policy).
2. Support staff in applying for the compensation by completing part of an application form
Members will need to complete an application form to access the Policy’s benefits. The form can be found here. The form confirms that the named member of staff has been working in an active clinical role that required registration with the appropriate professional body in 2019/20.
For most employees:
- Part 3 of the form should be signed by a Director of HR.
- You should return the original form to the clinician – but keep a copy for your records. The clinician will need to send the form to NHSBSA.
Employers of eligible Dentists and salaried GPs do not need to complete the form. Forms for these individuals will be endorsed as follows:
- Dentists will complete an electronic form on Compass for NHS Dental Services to endorse. This will be sent directly to NHS BSA once endorsed.
- Salaried GPs will need to upload the form to PCSE for endorsement. This will be sent directly to NHS BSA once endorsed. Further details will be provided soon.
Employing authorities will need to retain a copy of the form for their records for many years. This is because compensation may not come into payment for many years and will continue to be paid until the clinician dies. Although all administration of the scheme will be carried out centrally by the NHSBSA, and the payments directly funded by NHS England, the payments are deemed to come from the employer for 2019/20. It is therefore important that you retain the forms.
3. Support members if they have any questions about the Policy
As a key contact, members may come to you with questions about the Policy. We would recommend pointing members towards the following resources with their questions:
- NHS England’s website – www.england.nhs.uk/pensions/ contains:
- An infographic setting out the Policy and process in brief
- The ‘Quick guide for members’ this sets out the Policy at a high level and lists many useful sources of extra information for members
- The Clinician FAQ document – this sets out detail on the Policy and application process in more detail
- NHSBSA – the NHS Pension Scheme administrator, who will also administer Policy benefits
4. Decide whether to make a provision for the Policy in your accounts
As the Policy’s benefits will be paid for many years you will need to decide how and whether to account for them.
NHS Trusts – Trusts have been sent a letter showing an example of how this might be done, and Trust specific information for their 2021/22 accounts.
Higher Education Institutions – Higher Education Institutions have also been provided with accounting guidance and organisation specific information by UCEA.
The suggested approach is not mandatory, but it can also be used by non-NHS organisations. You will need to discuss this with your auditors.
GP and Dental Practices (Category 1) – If GP and Dental practices employ Category 1 clinicians that have applied for the Compensation Policy, a reserve for the future payment of these benefits and an equal and offsetting reserve future financial assistance receipts may need to be made in your accounts, if material. This should be discussed with your accountant/auditor.
GP and Dental Practices (Category 2) – Organisations such as GP Practices and Dental Practices with eligible clinicians classified as self-employed (i.e. Category 2 clinicians) will also need, if material, to make an allowance for the payment of Policy benefits (and financial assistance receipts relating to them) in their accounts. It is NHS England’s expectation (following discussions with HMRC) that the payment of benefits and the funding for this from NHS England are categorised as expenditure and income at the point that payments are made to beneficiaries, and therefore, that this will be neutral when measuring profits in any one year. A guidance note in respect of this will be provided in due course. Payments to beneficiaries by NHSBSA on behalf of these organisations will be made as “Miscellaneous Income” and will not be classified as profit disbursements.
Organisations with clinical staff who apply for the Compensation Policy will be provided with further information after the closing date for applications which will help you to account for the Compensation Policy’s benefits. It is the responsibility of organisations to make appropriate accounting provisions following discussions with your auditors.
Once you have completed the above steps we expect the requirements from employers to be minimal.
As indicated above, the application process will be triggered by the issue of 2019/20 Pension Savings Statements by NHSBSA and most employed staff will now have received these statements. Clinicians who are either moving to work for another organisation or about to retire will ask you to compete the form before they leave. However, you may have people coming to ask you to endorse the form as late as March 2022 (as 31 March 2022 is the current deadline for final receipt of the application forms by NHSBSA). Please note there could be people who apply after this date, for example if for some reason they have not received a Pensions Savings statement.
We would ask that employers prioritise endorsing the application forms when they are approached by their clinical staff. This will ensure that eligible clinicians can access the Policy’s benefits when they retire, and that NHSBSA will know how many people are applying for the Policy as soon as possible.
Employers will have minimal responsibilities in relation to the Policy on an ongoing basis. All administration of the policy will be carried out by NHSBSA.
Your only responsibilities are in respect of the Policy are:
- Retaining a copy of the Policy application forms you endorse (as the payments will be in pay for many years);
- Accounting for the Policy (if required following advice from your auditors); and
- Responding to any queries from NHSBSA (should they have them) about any application forms you have endorsed.
Yes. The benefits for eligible clinicians from the Policy will be funded centrally, and will be administered centrally by NHS Business Services Authority, although there will be some initial administrative costs for individual employers. NHSBSA already administer the NHS Pension Scheme, and payroll for some organisations.
For NHS trusts and GP practices/holders of contracts to provide front line services the Secretary of State stands behind the Policy. This is also set out in the letters from Simon Stevens and Amanda Pritchard dated 22 November 2019.
For HEIs which are the substantive employer of ‘clinical academics’ who meet the eligibility criteria, the promise to make the payments under the Policy will be made by the HEI, but on the condition that the Trusts (who hold the honorary contracts with the individuals) will guarantee to meet the costs of the payments under the Policy. The legal framework for this is being established and is ultimately backed by the Secretary of State commitment to Trusts (see above).
For independent sector providers, the promise to make the payments under the NHSE Policy will be made by the independent providers, but on the condition that NHSE will guarantee to meet the costs of the payments under the policy under the existing contracts to provide services. This will be ultimately backed up by the Secretary of State (see above).
Employers have been provided with letters to send to potentially eligible individuals aware of the Policy, together with the eligibility requirements. Links to these documents are set out earlier in the FAQs.
We will keep the FAQs up to date and provided additional communications for employers to use, should NHSE&I believe that they are required.
The delivery of the Policy will be managed by NHSBSA who are also responsible for running the NHS Pension Scheme. NHS England will directly fund NHSBSA for the costs of making payments to eligible clinicians who apply for the 2019/20 Policy on behalf of employers.
There will be some short term local administrative and implementation costs for employers.
Local governance and Equality Impact Assessments (‘EIAs’)
Trusts will need to sign off the Policy locally from an equalities and governance perspective. As such, trusts will be required to perform their own Equality Impact Assessments in respect of this Policy. The Department of Health and Social Care EIA assessment which was published in relation to future proposed pension flexibilities covers the key areas that Trusts will need to incorporate in their own EIA.
NHSE&I is developing the Policy in line with its own governance requirements. As such, policy information and its own EIAs will be made available.
The initial communication letter should be sent to anyone who a Trust or other employer believes could be eligible.
If a non-clinician receives the letter in error, then it is clear that the Policy does not apply to them. If a clinician whose entitlement under the Policy is nil because they do not breach the annual allowance receives the letter, then there is nothing misleading or incorrect with the statements in the letter (but their entitlement is nil).
Equally, if a person who is entitled to the Policy has not yet received the letter then they will still be entitled to payments under the policy and any contractual entitlements can be established at a later date. Therefore, we do not see a problem with sending the letter to all clinical staff, but this is a local decision.
There will be no national support or accountability for any other arrangement offered to employees outside the Policy’s scope/eligibility criteria.
If you have any further questions about the Policy or your responsibilities in respect of it, please contact us using the following contact details:
If you or your employees have questions about the Policy benefits please contact NHSBSA on
- Calling from the UK 0300 330 1346
- Calling from abroad 0191 279 0571