Pension fix ‘won’t stop early exodus’
The Government’s solutions to the pensions crisis facing large numbers of Independent Practitioner Today readers are only ‘sticking plasters’, according to the BMA pensions committee chairman.
Dr Vishal Sharma warned that rising inflation, plus anomalies in the Finance Act, meant thousands of doctors would incur huge tax bills on ‘false, non-existent’ pension growth and might be forced to retire this financial year.
The BMA has told the Government to fix anomalies directly by urgently amending the Finance Act to prevent doctors being unfairly taxed on pension benefits they will never receive. But instead, the Government was suggesting amending the NHS pension scheme.
Dr Vishal Sharma
Dr Sharma said: ‘While moving the revaluation date in the scheme rules will, at best, partially mitigate the problem, it does not solve it and for some doctors it may make matters worse.
‘Additionally, doctors who are members of non-NHS schemes may be excluded, hence why a robust solution would be to enact such changes in the Finance Act. Following public sector pension reforms, most NHS staff are members of two different but connected schemes.
‘The Government must urgently correct the anomaly that negative growth in one scheme can neither be offset against growth in another, nor carried forward or backwards into alternative tax years.’
He said the BMA had long campaigned to ensure those adversely impacted by pension taxation and left with little option but to opt out of the scheme could access the employer’s pension contributions.
Encouragingly, the Government had committed to ensure this was made available, but this had to happen in every employing organisation and represent the full value of the employer’s contributions.
Dr Sharma warned that the Government’s measures would not prevent doctors having to reduce their work or retire early as a result of punitive pension tax charges.
Doctors were simply asking that higher earners in the NHS paid the correct amount of tax on their pension savings.
‘We believe that a tax unregistered scheme, similar to the one the Government introduced to address recruitment and retention problems with senior judges in the judiciary, would provide a long-term and fundamentally fair solution both for taxpayers and for doctors.’