Independent report

NHS Pension Board annual report: 2022 to 2023

Published 16 December 2024

Applies to England and Wales

Introduction

This is the eighth annual report of the NHS Pension Board (NHSPB or the board). It explains the work the board has done in relation to its responsibilities relating to the NHS Pension Scheme for England and Wales (the NHSPS or the scheme).  

The board was established under the Public Service Pensions Act 2013 and has operated since 1 April 2015.

The board is responsible for assisting the Secretary of State for Health and Social Care, as the scheme manager, in:

• securing compliance with laws, regulations and directions which apply to the scheme
• complying with relevant requirements of The Pensions Regulator (TPR), particularly code of practice 14 on ‘Governance and Administration of Public Service Pension Schemes’

Executive summary

The board met 4 times during the year. Important activities included:

• working with the NHS Business Services Authority (NHSBSA), the administrators of the scheme, on services to members and employers, including continued improvements and opportunities for development in important areas
• assessing and monitoring management of risks, both for the board and for NHSBSA, in the governance and administration of the scheme - see ‘Risk management’ below
• considering and monitoring issues around member engagement, communication and response to change, particularly in relation to issues and developments in the period arising from the progress on remedial action following the McCloud litigation
• reviewing internal and external procedures for dealing with member complaints, their outcomes and any consequent learnings for the administration of the scheme

The NHSPS - some facts and figures (2022 to 2023 draft accounts)

There are 1.81 million contributing members across the NHSPS with pensionable pay of over £61 billion per year. Pensions are paid to around 1.1 million pensioners and dependants amounting to around £10.9 billion per year, paid weekly, quarterly or monthly. A further 0.77 million members no longer contribute to the NHSPS (known as deferred members) but retain an entitlement to receive a pension at retirement.

Both members and employers contribute to the NHSPS. Member contribution rates, which range from 5.1% to 13.5% of their pensionable pay, are tiered based on members’ earnings and 7,857 employers pay 20.68% of their pensionable pay bill. Of this, 0.08% is to cover the cost of NHSPS administration. Total contributions to the NHSPS are around £18.7 billion per year, with benefit payments of around £14.1 billion per year (this includes lump sum payments). The cost of NHSPS administration was £0.043 billion during 2022 to 2023.

NHSPB make-up, terms of reference and activities

Board make-up

There are 13 members of the board. Annex A lists the members, showing whether they are scheme member representatives or employer representatives. This list also shows:

• changes to the board during the year
• figures for attendance at board meetings

All board meetings during the year have been quorate. There must be at least 50% of board members present at a meeting for it to be quorate. It is also a requirement that the chair must be present.

Terms of reference

These are available at annex B. The board has reviewed these during the year.    

Board activities: the 2022 to 2023 objectives and work plan

The board operates according to a work plan. The work plan for 2022 to 2023 has been completed and is available at annex C.

The work plan contains a series of standing items, plus a number of specific matters. The specific matters include regular ‘deep dives’ on particular subjects, but items are added where the board wants to consider additional issues. 

The board also had a series of objectives in 2022 to 2023, and its performance against those is explained below.

1. Ensure that all responsibilities under the board’s terms of reference are met, including legislative and regulatory compliance, efficient and effective service delivery and the provision of the necessary assurance to the scheme manager. The board carries out this function in its regular meetings, primarily, with some specific issue-focused activities at other times.
2. Ensure that key risks are effectively identified and managed. The board reviews risk management at all regular meetings and continues to identify risks, responses and outcomes.
3. Consolidate and continue board member training and development, to ensure all members can perform their responsibilities effectively. Training (including via deep dive sessions and webinars shared with the Scheme Advisory Board (SAB)) and one-to-one discussions between board members and the chair have taken place throughout the year.
4. Ensure suitable succession planning is in place as board member terms expire. The board considers reasonable or unavoidable delay in board member replacement or term extension may be a matter of process completion only and wherever possible continues to operate, with any decision ratified as necessary.
5. Continue to focus on the role of employers in delivering effective outcomes for their staff who are scheme members and ensuring areas for improvement in employer performance are identified and implemented. The board considers progress on this at each regular meeting.
6. Consider and respond to any findings made by TPR in its annual survey of public service pension schemes. However, survey results from the January 2023 survey have not yet been made available.
7. Ensure continued focus on developing and implementing a programme of activities driving service improvement in respect of scheme administration, using the output from benchmarking, member feedback activities and employers’ priorities. The board receives and feeds back on regular reports on these issues, in its regular meetings.
8. Continue the development of effective working relations with all important stakeholders.
9. Ensure future legislative and regulatory developments which may impact on NHS pension provision are identified and responded to, as appropriate, in a timely and effective manner. Regular reporting is provided to the board by the Department of Health and Social Care (DHSC). The board has adopted and implemented a process for responding to government consultations on matters affecting the NHSPS, where it considers that would be an appropriate exercise in accordance with its functions.
10. Reviewing the development of legislation and operation concerning the McCloud discrimination remedy.

Conclusion

During this year, the board was extremely sorry to learn of the untimely death of member representative Alan Fox (of Unison). Alan was an excellent board colleague, with a strong understanding of pensions and clear objective of ensuring the best outcomes for members. He maintained a clear, balanced engagement with NHSBSA and DHSC. We miss him greatly.

We are looking forward to obtaining formal confirmation of appointments to the board of Chris Musgrave (Royal College of Nursing) and Glyn Jenkins (Unison) as new member representatives. Chris and Glyn have kindly attended NHSPB meetings prior to their formal confirmation of appointment and are active participants in discussions.

During the year 2022 to 2023, the board has continued building on strategic development of its role, while ensuring compliance with its statutory activities. We have moved our risk management activities to focus on emerging risks and monitoring the operation of risk mitigation actions. At the request of DHSC, we have worked with NHSBSA on a member-centric review and development of processes to manage complex cases and disputes, which we believe will support the services NHSBSA provides to all members. We have welcomed representatives of TPR and The Pensions Ombudsman (TPO) to our meetings during the year. We are also continuing to focus on developments, both legislative and practical, of the actions required to implement the McCloud discrimination remedy and the recent changes to scheme contributions.

Helen Miles
Chair

Risk management

Key

Red: extreme risk

Always unacceptable and requires mitigation to reduce probability and/or impact to reduce the residual risk.

Amber: moderate to high risk

Normally calls for mitigation to reduce the risk but should be measured against potential costs that may occur should the risk materialise and the level of risk tolerance should be identified.

In some cases an informed decision to tolerate the risk is possible where mitigation is not cost-effective.

Green: low risk

Normally requires no further action.

Care should be taken not to put unnecessary controls in place costing money and/or time.

Risk can be closed when confident.

Impact and likelihood rating

These are rated from 1 to 5:

• 1 is lowest impact or chance of occurring
• 5 is the highest impact or chance of occurring

NHSPB risk dashboard

Pension Board risk dashboard (March 2023)

NHSPB risks are:

• A: NHSPB failure to identify and report timely regulation breaches (impact 5, likelihood 1, low risk)

• B: failure to declare conflict of interest (impact 3, likelihood 1, low risk)

• C: NHSPB expertise to identify appropriate management information (MI) and scrutinise and/or challenge administrators (impact 3, likelihood 1 or 2, low risk)

• D: that NHSPB is unable to fulfil regulatory requirements due to membership turnover issues or absence of chair (impact 2, likelihood 2, low risk)

• E: reputational risk relating to NHSBSA strategic decisions and/or lack of control (impact 3, likelihood 3, moderate risk)

• F: Stakeholder Engagement Team reporting to NHSPB (impact 2, likelihood 3, moderate risk)

Administrator risks are:

• 1: ineffective engagement with employers and/or members (impact 4, likelihood 3, moderate risk)

• 2: members’ lack of appreciation of scheme benefits (impact 5, likelihood 2, moderate risk)

• 3: major data loss or confidentiality or General Data Protection Regulation (GDPR) breach (impact 3, likelihood 2, low risk)

• 4: systemic data quality issues (impact 4, likelihood 2, moderate risk)

• 5: systemic errors in calculating member benefits (impact 3, likelihood 1 or 2, low risk)

• 6: increase in late or non-payment of contributions (impact 4, likelihood 1, low risk)

• 7: increase in complaints leading to sanctions or potential reputational damage (impact 5, likelihood 2, moderate risk)

• 7a: impact of contingent decisions on complaint handling and funding (impact 5, likelihood 2, moderate risk)

• 8: major service failure (impact 5, likelihood 1, low risk)

• 9: major IT failure or cyber attack (impact 2, likelihood 1, low risk)

• 10: fraud (impact 2, likelihood 2, low risk)

External risks dashboard

NHS Pension Board external risks dashboard (March 2023)

External risks are:

• E1: cost of living and/or impacts of contribution costs, pension tax, savings offerings and similar lead to increase in scheme opt-outs (impact 4, likelihood 3, moderate risk)

• E2: there are significant scheme opt-outs resulting from the introduction of local flexible benefits packages, contribution recycling, cost of living challenges, avoidance of tax charges or introduction of new model of care (impact 4, likelihood 1, low risk)

• E3: valuation outcomes will result in charges to the scheme (impact 3, likelihood 3, moderate risk)

• E4: complex remedial action to respond to McCloud remedy (impact 3, likelihood 2, low to moderate risk)

• E5: increase in employer expectations due to employment levy (impact 3, likelihood 3, moderate risk)

Annex A: NHSPB membership

Chair

Helen Miles

Member representatives

• Dr David Bailey, British Medical Association - BMA Pensions Committee member
• Colenzo Jarrett-Thorpe, Unite - National Officer
• Glyn Jenkins, UNISON - Head of Pensions - confirmed as a member on 23 May 2023; attended NHSPB meetings as an observer since November 2022
• Geoff Lester, Federation of Clinical Scientists - NHSPB representative
• Chris Musgrave, Royal College of Nursing - National Officer, Team Leader - confirmed as a member on 23 May 2023; attended NHSPB meetings as an observer since November 2022
• Elaine Sparkes, Chartered Society of Physiotherapy - Assistant Director, Employment Relations and Union Services - appointed October 2021

Employer representatives

• Andrea Hester, NHS Employers - Deputy Director of Employment Relations and Reward
• Paul Thomas, NHS Wales Shared Services Partnership - Director of Employment Services
• Bryan Logan, Torbay and South Devon NHS Foundation Trust - Payroll Manager
• Amanda Bromley, Tameside and Glossop Integrated Care NHS Foundation Trust - Director of Human Resources
• Nina Singh, West London NHS Trust - Director of Workforce and Organisational Development
• Stuart Murdoch, Capita PLC - Assistant Pensions Manager

NHSPB meetings: members’ attendance 2022 to 2023

Attendance was:

• May 2022: 70%
• August 2022: 100%
• November 2022: 80%
• February 2023: 80%

Annex B: NHSPB terms of reference

Introduction

The Public Service Pensions Act 2013 (the act) required the establishment of a pension board with responsibility for ‘assisting the scheme manager’ in securing compliance with all relevant pensions law, regulations and directions - as well as the Pension Regulator’s relevant codes of practice. This role is one of providing assurance over and governance of the pension scheme’s administration.

The act also specified that pension boards should have equal numbers of member and employer representatives - currently 6 each on NHSPB.

NHSPB covers England and Wales.

Regulation 4 of the National Health Service Pension Scheme Regulations 2015 (UK statutory instrument 94 of 2015), effective from 1 April 2015, established NHSPB in law. Schedule 1 of those regulations adds further detailed regulatory provisions relating to NHSPB.

In addition to the member and employer representatives, government representatives attend NHSPB meetings, including DHSC, and Wales. Government representatives are non-voting board members. Professional advisors - for example, accountants, Government Actuary’s Department and lawyers - can be instructed from DHSC’s resource allocation providing the requirement for that advice is in line with NHSPB’s legislative responsibilities.   

The scheme administrator (NHSBSA) will provide the necessary input to support NHSPB in delivering its assurance responsibilities.

NHSBSA will provide the secretariat, with DHSC seeking nominations and making appointments to NHSPB based on the regulatory provisions. NHSPB meets quarterly.

Accountability

NHSPB collectively and members individually are accountable to the scheme manager, the Secretary of State, the responsible authority for the NHSPS.

DHSC continues to be responsible for contractual arrangements, including delivery against agreed key performance indicators (KPIs), for NHSBSA.

Responsibilities of NHSPB

NHSPB is responsible for assisting the scheme manager in:

• overall assurance and governance of the NHSPS administration
• ensuring effective and efficient administration of the NHSPS
• ensuring that decisions made by NHSBSA are fully legally compliant, including consideration of cases that have been referred to TPR and/or TPO; recommending changes to processes, training and/or guidance where necessary
• supporting continuous improvement in the administration of the NHSPS
• ensuring NHSBSA supports employers to communicate the benefits of the NHSPS and fully use it as part of the NHS total reward offer through effective communication to members
• ensuring NHSBSA supports members with a range of tools to improve their understanding of their pension benefits as part of the total reward offer, and to inform their personal financial and career planning
• supporting effective implementation of the employer charter
• enabling data quality improvements to deliver career average revalued earnings (CARE) pension outcomes
• complying with TPR’s codes of practice
• fostering good working relationships with TPR
• consideration of TPR reports including responses to recommendations
• producing an annual report outlining the work of NHSPB throughout the NHSPS year

Membership

The membership of NHSPB includes:

• member representatives nominated by the staff side of the NHS Staff Council to ensure a broad representation of NHSPS membership - for example, to include deferred and pensioner representation. Member representatives will be voting members
• employer representatives nominated by NHS Employers to ensure a broad representation of employers with NHSPS members - including, for example, NHS employing organisations, general medical practice and independent providers of clinical services as defined within a standard NHS contract. Employer representatives will be voting members
• an independent chairperson appointed via the public appointments process. The chair holds the deciding vote if any vote taken by the member and employer representatives on the board results in an equal vote
• representatives from DHSC, who are non-voting members
• a representative from the Welsh Government, who is a non-voting member

Attendance is expected of NHSPB members at all meetings. Where a member of the board is unable to attend board meetings or participate in activities of the board, other than temporarily, the remaining members of the board may agree that a substitute or another person may attend from that representative during that period. The appointed employer and member representatives will remain equal in number at all times.

Attendance at meetings by invitation

From time to time, NHSPB may (acting by its chair) invite attendance at any one or more of its meetings by others, which may include representatives of the SAB and prospective members of NHSPB (whether or not they have been selected to join NHSPB).

Decision-making process

NHSPB operates on a consensus basis. However, each member (except government representatives) has individual voting rights. In the event that consensus cannot be reached, a vote is taken. The chair does not vote at this stage; only if the vote is equal will the chair have the deciding vote. The scheme manager is made aware when a decision is reached in this manner.

Quorum

Half of the voting members of NHSPB represent a quorum for board meetings to go ahead, with at least 3 member representatives and 3 employer representatives being present. The chair must also be present for the meeting to be quorate. Non-quorate meetings may proceed in exceptional circumstances, but no binding decisions are made, nor votes taken.

Conflicts of interest

The act requires that members of NHSPB do not have conflicts of interests. All members of NHSPB are required to declare any interests and any potential conflicts of interest in line with legal requirements in the act and TPR’s code of practice. These declarations are required as part of the appointment process, as well as at regular intervals throughout a member’s tenure.

Training requirements

Members of NHSPB will be expected to have a good, sound knowledge and understanding of the NHSPS rules, the NHSPS’s administration policies and pension law. This will require ongoing updates and training as legal requirements change and develop including relevant regulations and directions from His Majesty’s Treasury and the Department for Work and Pensions. This is set out in TPR’s Code of Practice number 14, ‘governance and administration of public service pension schemes’.

Meeting arrangements

NHSPB meets quarterly. Frequency of meetings is kept under review to ensure NHSPB responsibilities are discharged.  There is the possibility for ad hoc meetings if required at the chair’s discretion.

NHSBSA undertakes NHSPB’s secretariat function ensuring:

• facilities are available to hold meetings
• an annual schedule of meetings is organised
• suitable arrangements are in place to hold additional meetings if required - ensuring adequate notice
• papers are distributed 7 days before each meeting except in exceptional circumstances
• minutes of each meeting are circulated within 14 working days following each meeting

Expertise

It may be necessary to draw on particular experts or expert groups to support the responsibilities of NHSPB, such as actuaries and lawyers.  This is done on an ‘as required’ basis; any expert advisor attending the meeting is not a NHSPB member and does not have a vote. If required, sub-groups may be established to assist NHSPB.

Relationship with the NHS Pension Scheme Advisory Board

While the function of the NHS Pension SAB is to provide advice to the Responsible Authority (such as the Secretary of State) about the desirability of NHSPS changes, there are occasional needs for some sharing of information and discussion between the boards.  The NHSPB chair holds regular meetings with SAB co-chairs, and the SAB minutes are a standing agenda item for NHSPB meetings.  NHSPB provides a summary of its meetings to the SAB.

Remuneration

Remuneration for NHSPB members is limited to a refund of actual expenses incurred in attending NHSPB meetings, in accordance with DHSC’s expenses policy.  The chair’s remuneration is agreed on appointment.

Tenure

Tenure period for NHSPB members is 3 years on a rolling appointment basis, with a maximum of 9 years in any continuous period of 12 years. 

Tenure is decided by the scheme manager during the appointment process but should usually be a term of 3 years.  NHSPB members may have different tenures, if necessary, to ensure continuation of membership in equal numbers for the employer and staff-side members.  The chair’s tenure is agreed on appointment, again expected to be 3 years.

Resignation of NHSPB members is documented in writing to the NHSPB chair and DHSC.  A minimum one month’s notice period must be given to enable a replacement member to be found in time for the next NHSPB meeting. 

The performance of NHSPB members is assessed on a periodic basis to ensure all members are adequately meeting their duties.  Poor performance will result in corrective action being taken, and in exceptional circumstances the removal of the NHSPB member.

Review

These terms of reference are reviewed periodically.

Annex C: work plan 2022 to 2023

These tables show at which meeting each task on the work plan was considered. The tasks on the work plan are grouped into 6 areas:

• risk management
• administration and NHSBSA
• board operation
• strategy and planning
• interaction with SAB, TPR and others
• McCloud implementation

Risk management

May 2022	Aug 2022	Nov 2022	Feb 2023	May 2023
Review key risks	Not applicable	Review key risks	Review key risks	Review key risks
Review risk management approach	Not applicable	Review risk management approach	Review risk management approach	Review risk management approach
Not applicable	Annual update review of key risks	Not applicable	Not applicable	Not applicable

Administration and NHSBSA

May 2022	Aug 2022	Nov 2022	Feb 2023	May 2023
MI and compliance pack review	MI and compliance pack review	MI and compliance pack review	MI and compliance pack review	MI and compliance pack review
Formal review of MI pack	Not applicable	Not applicable	Not applicable	Formal review of MI pack
Business improvement initiatives	Business improvement initiatives	Business improvement initiatives	Business improvement initiatives	Business improvement initiatives
Update from stakeholder engagement team and measuring customer experience deep dive	Not applicable	Not applicable	Not applicable	Update from stakeholder engagement team and measuring customer experience deep dive
Not applicable	Finance deep dive	Not applicable	Not applicable	Not applicable
Not applicable	Benchmarking output	Not applicable	Benchmarking output	Not applicable
Not applicable	Not applicable	Data quality deep dive	Not applicable	Not applicable
Not applicable	Not applicable	NHSBSA workforce directorate update	Not applicable	Not applicable
Not applicable	Not applicable	Not applicable	Consider changes to MI pack for future	Not applicable
Not applicable	Not applicable	Not applicable	Pension fraud risks deep dive	Not applicable
Cyber security update	Not applicable	Not applicable	Not applicable	Cyber security update
Not applicable	Not applicable	Not applicable	Directions update	Directions update

Board operation

May 2022	Aug 2022	Nov 2022	Feb 2023	May 2023
Sign off work plan for year to come	Not applicable	Not applicable	Not applicable	Sign off work plan for year to come
NHSPB effectiveness review	Not applicable	Not applicable	Not applicable	NHSPB effectiveness review
One to one - training needs review	One to one - training needs review	One to one - training needs review	One to one - training needs review	One to one - training needs review
Not applicable	Review terms of reference	Not applicable	Not applicable	Not applicable
Agree next 3 or 4 meeting dates - rolling basis	Agree next 3 or 4 meeting dates - rolling basis	Agree next 3 or 4 meeting dates - rolling basis	Agree next 3 or 4 meeting dates - rolling basis	Agree next 3 or 4 meeting dates - rolling basis
Not applicable	Review NHSPB member appointments	Not applicable	Not applicable	Not applicable
Not applicable	Review NHSPB annual report	Review NHSPB annual report	Not applicable	Not applicable
Not applicable	NHSPB effectiveness review - results	NHSPB effectiveness review - results	Not applicable	Not applicable
Not applicable	Not applicable	Not applicable	Agree outline for next NHSPB annual report	Not applicable
Not applicable	Not applicable	Not applicable	Training plan review	Not applicable
Not applicable	Not applicable	Not applicable	Training policy and process	Not applicable

Strategy and planning

May 2022	Aug 2022	Nov 2022	Feb 2023	May 2023
Horizon scanning - future developments	Not applicable	Horizon scanning - future developments	Horizon scanning - future developments	Horizon scanning - future developments
Comms update	Comms update	Comms update	Comms update	Comms update
Engagement outcomes annual review	Engagement outcomes annual review	Not applicable	Engagement outcomes annual review	Engagement outcomes annual review
Not applicable	Not applicable	Not applicable	Strategy planning	Not applicable

Interaction with SAB, TPR and others

May 2022	Aug 2022	Nov 2022	Feb 2023	May 2023
Not applicable	SAB annual update (date to be confirmed)	Not applicable	Not applicable	Not applicable
Not applicable	Not applicable	Not applicable	TPR survey results (annual)	Not applicable
Not applicable	Not applicable	Not applicable	TPO deep dive	Not applicable