Hospital Dr News

NHS Employers says seniors are retiring early and reducing hours over pension tax

Many senior doctors are struggling to find answers to their questions about pensions and the annual allowance.

This a finding of an NHS Employers report into the impact of pensions tax, which has been conducted due to the growing evidence suggesting that the changes in recent years to the annual and lifetime allowances are influencing the behaviour of NHS staff.

The report finds that few senior staff felt supported by either their employer or the NHS Pension Scheme when it comes to pensions tax issues.

Several stated that the time it takes for the NHS Pension Scheme to send Pensions Savings Statements (which employees need to calculate their tax position) is too long.

The report concludes there is a clear need for better information to be made available, and the uncertainty caused by lack of understanding may be driving unnecessary behaviour.

The Annual Allowance, which limits the amount of tax relief on pension saving, has been a growing problem for members of the NHS Pension Scheme (NHSPS) for several reasons.

The annual allowance has reduced substantially over time, tapering of the standard annual allowance was introduced and employees are exhausting their carry-forward of unused allowance from prior years.

This has resulted in senior staff receiving large and unexpected tax bills.

The report says those likely to breach the annual allowance in the future are considering taking actions such as taking early retirement, reducing their hours or turning down any additional work. These factors in combination could put significant strain on the NHS workforce and lead to staff shortages, it concludes.

On 3 June, the Government announced a proposal to introduce a 50:50 option to the NHSPS. This would allow employees to halve their pension contributions for halving the rate of pension growth in the 2015 Scheme. However, the proposal is currently limited to senior clinicians.

The report says this would help to ‘decelerate’ pension growth, reducing the risk of both annual and Lifetime Allowance charges, but it may not protect those with significant past service already accrued from annual allowance charges related to salary increases.

This option may not on its own allow an adequately sophisticated approach to allow effective tax management, it says.

Commenting, Dr Rob Harwood, BMA Consultant Committee Chair, said: “This comprehensive NHS Employers report backs the BMA’s own assessment of how serious the pension crisis now is. It shows a pattern of doctors being penalised with unfair and unwarranted tax bills, on average of around £22,000, with 99 doctors receiving staggering charges of more than £50,000.

“As the BMA has warned, these charges are resulting in many doctors reconsidering their working patterns in the NHS which will have a direct impact on patient care.”

Read the full report.

Bookmark and Share

Post a Comment

Enter this security code

Submit Comment for Moderation