More than 50,000 people have left the NHS Pension Scheme this tax year due to affordability concerns caused by the cost-of-living crisis, according to Quilter.
The data, which was obtained by submitting a request for information under the Freedom of Information Act to the NHS Business Services Authority, covers the timeframe from April to December 2022, and it reveals that 155,092 persons quit the pension programme during this period.
About 35 per cent of the opt-outs, or 53,762 people, were a result of financial constraints. But, since the data only includes the months of April through December 2022, it’s possible that this figure will rise.
Around 26,100 of those who quit the scheme say they have done so due to affordability, while 27,662 say to have temporarily opted out due to other financial considerations. To slow the growth of their pension and avoid paying annual allowance taxes, leavers can choose to rejoin.
Additionally, doctors’ working hours have been decreased as a result of the Annual Allowance fee.
According to Quilter, it’s crucial to get professional guidance since leaving a pension plan puts people and their families at greater financial risk.
Quilter NHS pension specialist Graham Crossley says: “Almost everyone has been feeling the pinch over the last year or so with inflation reaching eye-watering levels and many people’s mortgage bills putting a sizeable dent in salaries. This data illustrates that sadly people have decided to leave the NHS Pension Scheme in a bid to have more money in their pockets today.
“Although there are still significant problems with the scheme it is very generous and people opting out in their droves is worrying to see as it can have a significant impact on someone’s future retirement prospects.
“There also continue to be some technical problems associated with how the scheme is taxed which throw fuel on the fire and make it much more likely that someone will leave the scheme to avoid a tax bill.
“Opting out of the scheme for any reason may not be the best course of action and can have a serious impact on someone’s pension provision, as well as their family’s financial protection, so is therefore not a decision to be taking lightly and it is worth first seeking professional financial advice.”
