The consultants’ NHS pensions tax debacle has been described as ‘a national scandal’ by the House of Commons Health and Social Care Committee, which has called for urgent changes to help doctors.
Its report this week on recruitment, training and retention, which describes ‘the greatest workforce crisis in history compounded by the absence of a credible government strategy to tackle the situation’, condemned the effect of the tax rules which are costing some individuals six-figure sums.
The report said: ‘It is a national scandal that senior medical staff are being forced to reduce their working contribution to the NHS or to leave it entirely because of NHS pension arrangements.
‘Clearly, the Government’s changes to tax regulations have not gone far enough to remedy this crisis.
‘With mounting waiting lists and ever-increasing demands, the NHS cannot afford to lose staff who are willing and able to work, and urgent action is needed to reform NHS pensions and prevent the haemorrhage of senior staff.
‘The Government must act swiftly to reform the NHS pension scheme to prevent senior staff from reducing their hours and retiring early from the NHS. The temporary suspension of regulations governing the administration of NHS pensions, made under the Coronavirus Act 2020, helped to ameliorate this issue during the pandemic.’
It called on the Government to consider ways to achieve the same outcome after the pandemic and urged NHS England to develop a national NHS ‘retire and return’ policy to replace ad hoc local schemes.
In the short term, the Government should instruct NHS England to require NHS trusts to follow pension recycling guidance it had already issued to help deal with the short-term impact of the pension problem, the Committee added.
BMA welcomes the report
Dr Vishal Sharma
The MPs’ comments were welcomed at the BMA, where its pensions committee chairman Dr Vishal Sharma agreed: ‘The Health and Social Care Select Committee findings are correct – it is indeed a “national scandal” that senior doctors are being driven to reduce their hours or retire early, just when the NHS is facing the “biggest workforce crisis in its history”.
‘What is most scandalous is that this is a mess entirely the Government’s own doing through its absurd and unfair pension taxation policy – and it is entirely within its gift to solve, quickly.
‘It’s good to see the committee taking heed of the BMA’s warnings and fully recognise that despite the changes to the pensions taper in 2020, there remains an urgent and pressing need for Government to solve this issue in order to prevent a further exodus of doctors.
‘It is also vital that there is reform of pension taxation rules so that doctors can maximise the amount of care they can provide to their patients.’
He said for those doctors left with no choice but to leave the pension scheme, the committee had highlighted the necessity for employers to be mandated to ‘recycle’ the full value of pension contributions back to the employee in their wages.
Dr Sharma said the BMA still believed the long-term solution was a tax unregistered scheme, similar to one implemented for judges to solve the retention crisis in the judiciary.
This would remove the disincentives from providing more care for patients and enable doctors to work for longer.
And it would also ensure that doctors paid the correct amount of tax on their pension savings and therefore was a fair solution for the taxpayer.
‘Whilst the Government argued that the situation for the judiciary was different, as judges could not return to private practice, the BMA rejects this argument, as the vast majority of doctors do not do private practice and the BMA wants a solution that will retain doctors within the NHS.
‘We also firmly believe that the introduction of “pension flexibility” would not solve the problem and indeed this has been consulted on twice previously and rejected by both scheme members and the Government.’
Dr Sharma said that even since the committee’s evidence sessions, the need for reform had become greater.
Pay award is ‘another disincentive’
Last week’s 4.5% pay award, representing a real pay cut of over 6%, would provide yet another disincentive for senior consultants to remain in the NHS, as they would potentially lose more than £100,000 simply by delaying retirement for a single year beyond the age of 60.
‘Anomalies in the Finance Act, exacerbated by spiralling inflation, will see many doctors paying tens of thousand of pound of additional tax on non-existent pension growth. In effect, they will be taxed on benefits they will never receive, again pushing them towards early retirement.
‘In the context of a deepening workforce crisis and record waiting lists it is vital that the Government heeds the warnings of the BMA and the Health and Social Care Select Committee and urgently takes action to solve this issue before it’s too late. Otherwise, we will see an unprecedented loss of the senior medical workforce, a loss from which the NHS may not recover.’