Pension ‘cure’ is simply putting off the evil hour

All doctors need to understand the detail of NHS England and NHS Improvement’s decision to reimburse clinicians’ pension tax liabilities for 2019-20, according to the BMA. 

Dr Chaand Nagpaul, BMA Council chairman

Council chairman Dr Chaand Nagpaul said: ‘This move seems to promise to ensure pensions for eligible doctors won’t be reduced at the point of retirement. 

‘However, when for many, retirement could be 30-plus years hence, the offer needs to be absolutely guaranteed contractually and legally in respect of both the payment and it’s longevity, particularly when substantial additional pension tax penalties can be incurred by taking on additional work. 

‘A much simpler solution would be for the Government to write off these punitive liabilities for this year, allowing time for tax reform.’

Prof Derek Bell, president of the Royal College of Physicians of Edinburgh, advised doctors wanting to know more about NHS pension changes to get independent advice from a pensions adviser.

Andrew Pow, executive board member of the Association of Independent Specialist Medical Accountants (AISMA), said it was important that doctors understood that the proposals related only to their 2019-20 tax payments. 

‘Those with large annual allowance tax charges for 2018-19 will still need to pay these in January 2020.

‘It is uncertain if the payment of the 2019-20 tax on retirement may lead to a benefit-in-kind income tax charge. 

‘While positive news at first glance, the announcement contains significant uncertainties, including the potential for some form of down-the- line tax charge, which may not lead to the change in behaviour that is intended.

‘Doctors who have already opted out of the NHS Pension Scheme to avoid the annual allowance tax charges should talk to a specialist financial adviser as soon as possible to consider the pros and cons of re-joining the scheme.’