GPs views sought on changes to NHS pension

Author: Adrian O'Dowd

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The government has issued proposals to clarify and make the NHS pension scheme more flexible, but doctors and NHS organisation leaders have already said they will not solve current problems.

The Department of Health & Social Care yesterday published its NHS Pension Scheme: proposed flexibility consultation document in an attempt to solve problems with the current scheme, which is highly unpopular.

The NHS Pension Scheme has a tapered annual allowance that means some clinicians are facing significant tax bills. The tapered allowance was introduced in 2016 and reduces the amount that high earners can save into their pensions, tax-free.

Around a third of GP practice partners and NHS consultants have earnings from the NHS that could potentially lead to them being affected by the tapered annual allowance.

The system has led to many senior clinicians reducing their NHS working hours or retiring early because they face large pension tax bills for working extra shifts to help reduce waiting lists and/or cover vacancies.

The Department said it was aware that some clinicians were considering reducing their workload and turning down additional work to slow down the rate at which their NHS pension grows each year to avoid breaching their annual allowance of up to £40,000.

In the new consultation document, it proposes a new 50:50 option, which lets clinicians halve their pension contributions in exchange for halving the rate of pension growth.

Improved flexibility would give clinicians more control to better manage their pensions growth and tax liabilities thus allowing them to avoid cutting their hours and to work additional shifts to reduce waiting lists, or take on further supervisory responsibilities.

The consultation focused on 50:50 as the main option to resolving concerns, as it balanced simplicity with the need to offer flexibility, said the government, which was seeking views on whether this went far enough.

Health and social care secretary Matt Hancock said: “Too many of our most experienced clinicians are reducing their hours, or leaving the NHS early because of frustrations over their pension. I want them to know that I am listening and I want to work with them to fix it for the sake of patients.

“We want to make it easier for our hardworking senior doctors to balance their workload, their pension pot and their tax bill ‒ with more flexibility, more choice, and less need to pay upfront.”

The British Medical Association (BMA) said it was highly sceptical of the consultations’ proposals which had followed months of lobbying of the Treasury and wider campaigning by the BMA for reform of the current pension taxation system.

Even as part of the solution, 50:50 was not sufficiently flexible, said the trade union, and would leave GPs and hospital doctors paying too much tax in some years and getting insufficient pension in others.

Chair of the BMA consultants committee Dr Rob Harwood said: “This consultation does little other than add to the intolerable dilemma facing many doctors – a commitment to their patients put in jeopardy by these ridiculous taxes which are forcing doctors to effectively pay to go to work.

“We believe an effective consultation should have explicitly included the option to scrap the Annual Allowance or Tapering Annual Allowance. However, as it stands, the government must recognise there needs to be a full range of scaled pension membership from 10:10 to 90:90, each with recycling of the residual employer contributions.

“A fully flexible approach like this would be cost neutral to the NHS, because the employer’s pension contributions being given up would be paid as taxable salary. Without recycling, a 50:50 approach would be a substantial pay cut for GPs and hospital doctors, and – with such an unattractive offer – almost certain to be set to fail.”

Niall Dickson, chief executive of the NHS Confederation, said: “Operations are already being delayed and cancelled while doctors and other senior staff are reducing their hours and, in some cases, quitting the NHS all doubtless because someone failed to think through the consequences.

“The current proposals do not appear radical enough to tackle the problem - what we need is a more wide-ranging set of reforms which extend beyond doctors and do not seek to penalise hard working professionals many of whom have devoted their careers to public service.”

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