Budget stems exodus from pension scheme
By Charles King
Pension tax reforms in the last Spring Budget have reduced the number of doctors leaving the NHS Pension Scheme (NHSPS) due to issues with the lifetime allowance and annual allowance.
According to Government data, the number has nearly halved since the change was announced,
Figures from the NHS Business Services Authority (NHSBSA), which have been analysed by specialist financial mutual Wesleyan, show 46% fewer individuals left the scheme between April and June 2023 because of issues with the allowances than did so over the same period in 2022.
This compares to a 2% rise in the number of medical professionals citing the lifetime and annual allowances as the reason for withdrawing between April and June 2021 and the same period in 2022.
Wesleyan’s head of medical, Alec Collie, said: ‘These figures are an early indication that the Spring Budget tax changes are alleviating some of the tax pressures that are impacting doctors and dentists.
‘However, this isn’t a magic wand and problems persist. Those who received unexpected tax bills and left the NHSPS won’t all be rushing to rejoin the scheme unless they see evidence that the new limits aren’t just going to result in the same issues.
‘We are urging anyone now thinking about rejoining the NHSPS or worried about their pension or tax situation to seek professional advice. This is still a very complex area, with different implications for different circumstances.’
Research by Wesleyan last autumn found 29% of 293 doctors quizzed planned to retire this year amid pension taxation issues and workload pressure.
Of those retiring earlier than planned, one in six said it was because they had hit their lifetime allowance. Thirty per cent of medical professionals said they had cut their hours to help manage their tax situation.
In a bid to help address this issue, Chancellor Jeremy Hunt announced in March’s Spring Budget that the annual allowance would increase from £40,000 to £60,000 from the start of the 2023-24 tax year, and that the lifetime allowance would be abolished.
Wesleyan said its analysis of data was received from the NHSBSA through a Freedom of Information request about the number of monthly opt-outs from the NHSPS and the reasons for opting out.