Pictured: Sue James, who retired for 24 hours as chief executive of Derby Hospitals in March 2014. She claimed a £155,000 pension lump sum on top of her £200,000 salary, even though her trust lost £15.7million
A revolving-door scandal that allows NHS executives to ‘retire’ for just 24 hours before being rehired for exactly the same role is to be banned in a victory for the Mail.
Thousands of bosses have exploited a loophole that lets them stand down temporarily and start withdrawing their generous pensions – before returning to their old jobs and six-figure salaries in days.
Some have taken out tax-free pension lump sums worth up to £250,000 and used the money to pay off their mortgage or buy a second home.
But under new rules from the Department of Health, staff who want to retire will only be allowed back to the same hospital in special circumstances, such as an experienced nurse who wants to leave her full-time post to work on just one or two days a week.
The crackdown follows a series of Mail investigations that exposed how NHS bosses were routinely retiring, cashing in their pensions, then coming back. They included Sue James, chief executive of Derbyshire Hospital, who claimed a £155,000 pension lump sum while still earning a £200,000 salary.
NHS figures show that at least 7,143 staff under 60 used the ruse – but this doesn’t include GPs, who are thought to be among the most likely to use the loophole.
The rules, which come into force immediately, state staff cannot quit for 24 hours to ‘gain financially’. Instead, managers must consider whether there is a genuine business case for rehiring an individual who will offer ‘value for money’, and if anyone else could be hired on a lower salary.
Pictured: Basil Fozard, who retired as a hospital medical director only to be rehired a month later on an even bigger salary. He stood down from his post at the Royal Bournemouth and Christchurch Hospitals in Dorset on May 31, 2015. Four and a half weeks later he returned to work on a £152,000 salary, a £20,000 increase. His month-long ‘retirement’ also enabled him to start drawing from a £1.9million pension pot
A Department of Health spokesman said: ‘We are clear that staff should not gain financially by retiring and returning to work, and employers should justify re-employment on the grounds of need and value for money.
‘We want to encourage former NHS staff to bring their skills and experience back to help provide outstanding patient care, but taxpayers rightly expect salaries to be appropriate.’
The NHS is facing its worst financial crisis in a generation as it struggles to meet the needs of the rising and ageing population. Hip and knee replacements and cataract surgery are being rationed and nurses have had their wages capped for seven years.
Labour health spokesman Justin Madders said: ‘It’s hard to understand why managers are allowed to draw six-figure pension payouts, then just carry on working as before. Patients will want to know that every penny is being used to improve services, not going into the pockets of the management.
Pictured: Peter Herring, who retired as chief executive from Shrewsbury and Telford Hospitals in April 2014 and returned to work a day later. He claimed a £250,000 lump sum on top of his £185,000 salary
‘Ministers need to get a grip and make sure that the best interests of patients are being protected.’
John O’Connell, chief executive of the TaxPayers’ Alliance, said: ‘Taxpayers want their cash to be spent on frontline services and patient care, not lining the pockets of retirees who don’t actually intend on retiring.’
Ashley Seager, co-founder of the Intergenerational Foundation, which stands up for younger generations, said: ‘We support this crackdown. Retire and return is another example of baby boomers with their fingers in the till.’
Officials believe the loophole is mostly exploited by well-paid doctors and managers, whose pensions may be near to the £1million limit.
Once their pension pots exceed this ‘lifetime allowance’ cap, they are taxed heavily when money is paid out. But by taking temporary retirement, they can withdraw a large proportion of their pension before it reaches the cap.
The Government has stopped short of banning 24-hour retirement completely because it can occasionally be beneficial.
The NHS is severely understaffed and trusts are desperately trying to retain nurses, midwives, certain specialist doctors and GPs.