The government has launched a consultation on amending the contribution rules of the NHS Pension Scheme in a bid to mitigate the possibility of members hitting tax allowances.
The proposed 50:50 option will allow scheme members to halve their pension contributions in exchange for halving the rate of pension growth, thereby slowing the growth in their pot and avoiding the £40,000 annual allowance.
The Department of Health and Social Care's (DHSC's) planned amendments come after the tax impacts of accrued benefits forced senior clinicians to drop hours or retire early, driving up patients' waiting times.
While members are also able to use scheme pays facilities - where the scheme pays members' tax liabilities upfront, and then recoups this plus interest during retirement - the DHSC hopes to make this more transparent. This could include providing members with a ‘pension debit' on their final expected retirement income, using more user-friendly calculations of deductions.
Health and social care secretary Matt Hancock said "too many" experienced clinicians had "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," he continued. "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.
"It's vital any changes are based on real experiences and I urge all consultants, senior nurses, and GPs to have their say."
Yet, while it recognised the problem that around a third of NHS consultants and GP practice partners are particularly afflicted by the tapered annual allowance - which reduces the annual allowance by £1 for every £2 of income above £110,000 (including non-pensionable income) to a nadir of £10,000 - the DHSC said "matters of tax policy are the responsibility of the Treasury".
Quilter head of retirement policy Jon Greer said the proposals were nothing more than a "sticking plaster".
"The plan, which is meant to give senior clinicians more flexibility in how they save for a pension and better equip them to avoid the pension tax charges, illustrates government is unwilling to properly diagnose the root cause of this issue," he said.
"The annual allowance taper, a complex piece of pension tax legislation, is resulting in clinicians facing punitive tax bills for working additional hours. It means that NHS services are being left short-staffed. The policy should be completely unwound, rather than implementing this workaround."
Boris Johnson, who was announced Conservative party leader today and will be confirmed as prime minister tomorrow, said the tax issue was "obviously wrong" and that he would fix it, but provided no details on how he would approach the problem.
The consultation closes on 14 October.
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