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Raising threshold income will not solve NHS pensions crisis, says BMA

The Government wants to increase the threshold income at which the tapered annual allowance applies to NHS pensions, reports in The Times suggest.

Currently doctors earning over £110,000 are affected and have received significant additional tax bills. Reports suggest the Government wants to increase this to £150,000.

Many senior doctors have reduced their hours or are considering early retirement over the additional pension taxation.

The Government pledged to address the problem as part of its election manifesto, but didn’t offer any details.

Dr Vishal Sharma, BMA pensions committee chair, criticised the proposals.

He said: “It does not fix the fundamental problem of doctors being forced to limit the work they do to prevent being hit with significant charges on their pensions and many will still in effect be paying to go to work.

“As the BMA has said from the outset, the annual allowance is completely unsuitable for defined benefit schemes. Simply, raising the threshold income would not remove any of the complexity of the taper, nor the threat of doctors facing a ‘tax cliff’ when their income increases through promotion or taking on additional work. Indeed, unless there is also an increase in the level of adjusted income, this proposal would only make this ‘tax cliff’ steeper.”

The Institute of Fiscal Studies also believes moving the threshold will not remove the problem – and, like the BMA, is calling for fundamental tax reform.

Sharma also warned that due to the complexity of the way pension growth is calculated doctors would still limit their hours just in case.

“With a final figure only known at the end of the tax year, even those who earn well below this increased threshold would still likely limit their work to ensure they’re not hit with unexpected charges,” he said.

Doctors and our patients desperately need an immediate solution that is simple and solves the problem completely – the NHS cannot cope with further half-measures, he said.

The BMA wants the annual allowance and tapered annual allowance in defined benefit schemes scrapped.

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