Question to the Department of Health and Social Care:

To ask the Secretary of State for Health and Social Care, what assessment he has made of the impact of recent inflation levels on the NHS pension scheme.

The National Health Service Pension Scheme protects the value of pensions in payment by increasing them by the Consumer Prices Index (CPI) each April, based on the CPI figure from the previous September. The Scheme also revalues accrued career-average pension benefits by CPI plus 1.5% each year for active members.

A higher rate of revaluation will increase the size of pensions and may therefore increase annual allowance pension tax liability where inflation is increasing. However, when inflation reduces in the subsequent tax year, this may increase the scope for more pension growth before exceeding the annual allowance that year. Most NHS staff build their pension tax-free. Where the annual allowance is breached, it is not required to pay the tax in advance. The Scheme Pays facility allows staff to meet any annual allowance charge from their existing pension.