Health secretary Matt Hancock is expected to set out further changes to the NHS pension scheme, following complaints that the government’s recent consultation doesn’t go far enough.
Concerns about doctors’ pensions hit the headlines when it emerged doctors were refusing shifts to avoid high tax bills.
The government is consulting on how to fix the issue and plans to introduce a 50:50 option which would allow clinicians to “halve their pension contributions in exchange for halving the rate of pension growth”.
However, the British Medical Association (BMA) argued the 50:50 proposal would not remove the incentive for doctors to reduce their working hours, stating that only scrapping the tapered annual allowance will do this.
The tapered annual allowance was introduced in 2016 and gradually reduces the allowance for those on high incomes, meaning they are more likely to suffer a tax charge on contributions and a lifetime allowance tax charge on their benefits.
The tapered annual allowance means that for every £2 of adjusted income above £150,000 a year, £1 of annual allowance will be lost.
The BMA said while it was positive that the government is beginning to recognise the problem, the real solution must be in overhauling the “damaging tax legislation” – including the annual allowance and tapered annual allowance – that leaves senior doctors facing large unexpected tax bills.
The BMA revealed that out of 6,170 GPs and hospital members, 31 per cent of respondents had already reduced their work commitments due to pension tax charges.
As a result of these charges, 42 per cent of GPs reduced their hours, while 34 per cent planned to do so.
Additionally, 30 per cent of consultants reduced their hours while 40 per cent planned to do so.