Knowledge & Insight

Pension reform and the healthcare sector

Mon 26 October 2015

NHS employers have come under a diverse range of pressures in recent years, in the shape of funding cuts, major organisational restructures and ongoing changes to service targets to name just a few. And the latest challenge is the looming public sector pension reform, which for some employees, appears to offer a toxic combination of working longer, contributing more and receiving less. The challenge for employers therefore is to devise an efficient implementation strategy, to fully understand how their workforce will be affected, and to manage employee communications very carefully.

Changes to pensions taxation

The main changes affecting employees are likely to be the reduction in the Annual Allowance from £50,000 to £40,000, and the decrease in the Standard Lifetime Allowance from £1.5 million to £1.254 million. Within the healthcare sector, it is apparent that these changes will mainly impact senior medical staff and executives and senior managers, and whilst the reforms are unlikely to have any significant effect on healthcare executive recruitment, employers would do well to ensure they fully understand the impact they may have on the attractiveness of remuneration packages.

Just one more challenge

Ultimately, changes to pensions represent just one more challenge facing healthcare employers. And as with previous challenges, an organisation’s ability to overcome it will depend on the experience and expertise of its leaders. In the healthcare sector perhaps more than any other, success depends on recruiting and retaining high-calibre individuals with the energy and vision to create effective solutions in a challenging environment, without compromising the quality of service provision.

Communicating the changes

As NHS employers compete with each other to recruit managers, senior clinicians and executives, each organisation must be able to clearly communicate the precise value of any package on offer, including pension. The existing NHS pension scheme leaves room for employees to opt for other means of remuneration in place of cash, without impacting their pension. Yet it remains unclear how pension accrual will be affected by such action once the switch from final salary pension to career average pension tales place. And given the proposed changes to salary sacrifice arrangements, employers must consider how they convey benefits to potential candidates.

Healthcare executive recruitment

Stone Executive specialise in healthcare executive search. Our team of hugely experienced healthcare head hunters have an outstanding track-record of identifying and engaging with some of the most sought-after talent in the sector, as well as experienced executives from other sectors. Our healthcare executive head hunters boast a professional network that spans Strategic Health Authorities, Primary Care Trusts, NHS Trusts, Community Health Service Providers and private sector healthcare companies, so they are ideally placed to fulfil even the most challenging of assignments.

 

 

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