NHS faces regulatory action over cash-for-pension offer

According to the Financial Times, the Oxleas Trust is offering newly-qualified nurses a higher salary if they opt out of the NHS pension.

The deal has been brought to the attention of the NHS Pensions Board, who is considering referring the Oxleas NHS Foundation Trust to the Pensions Regulator.

NHS Pensions Board member, Paul Moloney, said:

“It is clear from the Trust’s website, that an inducement of a higher pay rate is being offered to those who do not join, or leave, the NHS pension scheme, which is the scheme used for auto-enrolment for all NHS employers.

“The Pensions Regulator’s own guidance quotes an example of a clear-cut breach of automatic enrolment legislation, as an employer offering higher pay as an incentive to leave an auto-enrolment scheme.”

Steve Webb, former Minister of State for Pensions, commented:

“This is a very worrying precedent. The whole idea of automatic enrolment is that millions of people will benefit from saving in a pension and that this should be the default position. Without having to take any action, auto-enrolled workers start to build up pension rights and can look forward to a better retirement. But this idea would be fatally undermined if employers start offering cash today on condition that workers opt out of their pension.   

“Cash today is always likely to be more attractive than cash in retirement, but if this catches on, especially among younger workers, all of the progress made under automatic enrolment could be undermined. Even if the offer by this NHS Trust is technically within the letter of the law, it is certainly not in the spirit of automatic enrolment. Ministers and regulators need to investigate urgently to ensure that a loophole does not emerge which could set back the encouraging growth in pension coverage which we have seen in recent years."