Hospital Dr News

Government to review NHS pension changes that have penalised senior doctors

The Government will review the NHS pension changes that have led to many senior doctors considering early retirement.

The Department of Health and the Cabinet Office announced that ministers will “consult on proposals to offer senior clinicians a new pensions option”.

A statement said they are favouring a 50:50 option which would allow clinicians to halve their pension contributions in exchange for halving the rate of pension growth.

This would enable doctors “to build their NHS pension more gradually over their career by making steadier contributions towards their pension, without facing regular significant tax charges”.

It claimed clinicians would be enabled to “freely take on additional shifts to reduce waiting lists, fill rota gaps or take on further supervisory responsibilities”.

Introduced in 2016, rule changes mean that doctors now pay tax on any growth of the deemed value of their pension over the tax-free annual allowance of £40,000.

Many consultants have received large unexpected tax bills – with many topping £50,000.

It has resulted in senior doctors no longer taking on additional work – such as Waiting List Initiatives or management roles – because they are effectively being taxed 100% for it.

Matt Hancock, Health and Social Care Secretary, said the NHS was losing “too many of our most experienced people early because of frustrations over pensions”.

“The reforms we are setting out today will give clinicians greater flexibility to manage their pensions, have more control over their future, and offer a deal that’s fair to doctors, taxpayers, and the patients they care for.”

However, the BMA said it didn’t go far enough.

“The BMA has already outlined a number of temporary mitigations which, if swiftly applied, would stop experienced doctors leaving the NHS or reducing the hours of patient care they provide and we are giving a cautious welcome to the fact this is a step in the right direction for reform,” said Dr Chaand Nagpaul, Chair of BMA Council.

“We have modelled the proposed 50:50 scheme and it is clear that by itself this proposal will not remove the disincentive for doctors to reduce their working hours. It needs to be part of wider reform.

“Given the complexities of the NHS pension scheme and the fact that individual circumstances vary, it is essential that any flexibility offers far more than simply paying half of the employee’s contribution in order for half the accrual of pension. In addition, there needs to be the ability to recycle the employer’s pension contribution on the percentage of pay that is no longer pensionable. This is commonplace in other sectors with the Chancellor describing such payments as ‘regular’.

“In addition, given the unintended consequences that have arisen as a result of separate changes to the NHS pension scheme and the introduction of the tapered annual allowance, it is essential that these options are no more than a short term mitigation whilst the much needed reform of the pensions taxation system is undertaken”.

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