The government has been urged to extend temporary tax changes for public sector key workers beyond March 2022 or face an “NHS exodus”, after a freedom of information request from Quilter revealed that over 7,000 staff could be at risk of a pension penalty.

Figures from the NHS Business Service Authority (NHS BSA) showed that over 7,000 doctors and nurses could face a financial penalty on their pension once the Coronavirus Act powers expire in March 2022, and could leave the health service as a result.

Under the act, recently retired NHS staff were able to return to work amid the pandemic without taking a penalty on their pension, although this is scheduled to come to an end on 24 March 2022.

At this point, NHS workers’ pension will instead be reduced pound for pound if their earnings plus the ‘unearned’ element of their NHS pension exceed their pre-retirement NHS pensionable earnings, which is called ‘abatement’.

The NHS BSA confirmed that it has mailed 10,729 NHS pension scheme members in relation to the upcoming legislative changes, of which 7,470 could be adversely impacted by the return of abatement.

In light of this, Quilter warned that "time is quickly running out", and added that many NHS workers will have already received their letters and will be currently making a decision on whether to keep working after 25 March.

In a letter to the Health Secretary, Sajid Javid, the firm urged the government to consider using provisions granted under the Coronavirus Act 2020 to extend the ‘abatement’ powers contained in the act, until such a time when the health service is under less pressure.

Quitler NHS pensions specialist, Graham Crossley, commented: “The clock is ticking before the government risks thousands of NHS workers leaving the health service, at such a critical time, all because of a relatively mundane pension rule.

“Many NHS workers will have already received their letters and will be making the decision as to carrying on working after 25th March, should that mean a penalty on their pension.

“Although recent headlines about pandemic have been more positive, there are still significant pressures on the NHS and the prospect of thousands of NHS staff leaving in March to understandably avoid a financial penalty will add to an already challenging situation.

“The good news is that there is a quick fix to the impending problem. The Coronavirus Act 2020 includes provisions to allow the extension to any of the powers contained within the bill and this issue should be raised urgently in government.

“While the attention of the government appears to be firmly elsewhere at the moment, it’s important they remember the here and now of the health service.”

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