BMA dismisses Government plans to ‘fix’ doctors’ pension tax crisis

By Robin Stride

New Government proposals this week to ‘fix’ pension rules and ease the tax burden on senior doctors have been greeted with disappointment by the medical profession.

The plans, subject to an eight-week consultation, fall short of long-term solutions, according to the BMA.

Dr Vishal Sharma

Its pensions committee chairman Dr Vishal Sharma said the proposals appeared to be ‘too little, too late’ but his team would need to consider the detail, aimed at improving NHS pension flexibility.

He warned: ‘Doctors will continue to incur sky-high and completely unexpected tax bills, simply by continuing to provide care for patients, care that they desperately need.

‘At a time when staff are facing unprecedented pressure, this is devastating for morale and it’s unsurprising that people are planning to leave in their droves.’

While a proposed partial retirement option and greater flexibility for recently retired doctors returning to work had potential benefits, the issues caused by the annual and lifetime allowances were not being directly addressed.

Dr Sharma said: ‘These are not just issues for doctors nearing retirement, but they are also increasingly influencing the decisions of mid-career consultants and GPs, for whom partial retirement would not be an option. 

‘These doctors will still have to consider reducing the work they do to prevent incurring large punitive tax bills and it is disingenuous of the Government to suggest that this will make any meaningful difference to the huge backlogs in care we are seeing.’

Impact on inflation

Another proposal in the Department of Health and Social Care (DHSC) consultation attempts to reduce the impact of inflation. Dr Sharma said this might have an effect this year, but without a change to the Finance Act, doctors would be negatively hit in the coming years. 

The DHSC claimed the proposals would ‘fix pension rules’ and benefit senior doctors as well as other NHS staff.

Proposed changes include: 

Fixing the interaction between the pension tax system and inflation ‘to ensure senior clinicians have more headroom against the £40,000 pension tax annual allowance. This means senior doctors are either less likely to receive a tax charge, or will receive a smaller tax charge, reducing the likelihood of early retirement’;

An option of partial retirement to support older staff who want to work more flexibly and enable them to access part of their pension while continuing to contribute to their pension pot. 

The DHSC said this would allow those who had retired to come back and either claim all or a portion of their pension but continue working and build more pension benefits;

Removing limits on hours that recently retired staff can work, giving them control over the hours they work in the first calendar month after returning; 

Allowing retired staff to rejoin the pension scheme, ‘making returning to work in the NHS more attractive by ensuring senior clinicians can continue to contribute to their pensions from their NHS work.