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Health and social care secretary confirms NHS pension tax relief pledge

Hancock backs NHS England & Improvement proposals to stop clinicians facing extra tax on their pensions if they work overtime

Caroline White

Monday, 09 December 2019

Health and social care secretary Matt Hancock has formally agreed to the proposals from NHS England & Improvement to ensure that clinicians don’t face additional taxes on their pensions if they take on extra shifts or sessions.

In a statement issued on Saturday he said that he had agreed to support this proposal “for reasons of urgent operational necessity.”


He explained that employers would make binding contractual commitments to every affected NHS clinician so as to ensure that this commitment is honoured.

Full details of the terms of the payment arrangements have been set out in letters that are being sent to each affected clinician by their employer, including the terms and conditions of the offer, he explained.

“These binding contractual commitments will provide for payment to be made when the clinician takes their pension, at which point the employer (or its successor) will be liable for the payment. NHS England has undertaken to provide funding to the employer (or its successor) in respect of those liabilities as the payments are made,” he said.

What’s more, he pledged that the arrangements would remain in place even if the NHS trust or foundation trust employing that clinician ceased to exist.

If that were to happen, “statutory provisions to ensure its liabilities, including commitments to staff, would be transferred to one or more existing NHS bodies, or the secretary of state. The secretary of state ultimately takes responsibility for the liabilities of NHS bodies including NHS England and NHS Improvement,” he confirmed.

“Clinicians are therefore now immediately able to take on additional shifts or sessions without worrying about an annual allowance charge on their pensions,” he added.

In further confirmation of the impact the changes to pension tax legislation have had, a member survey* by the Royal College of Paediatrics and Child Health (RCPCH) shows that more than half (56.5%) of 715 respondents said they have changed their working practices to avoid incurring unexpected tax bills.

Some 59% of respondents think that the changes have led to a reduction in paediatric services and 79% said that they are likely to retire earlier because of this issue. Respondents cited increased waiting list times, closed wards, cancelled clinics, poor morale, and concerns around patient safety.

Around a third of respondents have already been issued with a pension related tax bill, averaging between £10,000 and £20,000, with many totalling over £50,000.

Grace Brown, policy officer at RCPCH explained: “In 2016, the then chancellor of the exchequer, George Osborne, introduced new legislation on pension savings. A reduction in pension tax relief for high earners was designed to bring in more money for the government without causing financial harm to the majority of the public.

“The complexity of the rules around pension tax relief, however, has had serious and sometimes life changing consequences for many people working in the NHS. As such, a policy that was intended to only affect a minority is exacerbating workforce shortages within the health service and impacting on the healthcare of the entire UK population.”

Dr Camilla Kingdon, vice president for education and development at RCPCH, said: “It goes without saying that neither me nor my colleagues have a problem with paying our fair share. We are public servants and believe passionately in the NHS. But it stings to be handed an astronomical and unexpected bill, incurred as a strange form of punishment for career advancement and picking up extra shifts to help carry some of the rota pressures we all face.”


*RCPCH pensions survey - the impact of pension tax legislation on our UK members. RCPCH, November 2019.

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