The British Medical Association has urged the Treasury to review pensions tax relief rules, as the current rules risk “deepening the recruitment crisis in general practice”.
The BMA has said that the current rules are encouraging GPs and consultants to cut their hours, retire early or leave the scheme entirely. In a letter to Chancellor Philip Hammond, BMA council chair Chaand Nagpaul said the NHS already faces a “drastic shortfall” in general practice.
According to Chase de Vere Medical, doctor’s fears have significantly increased since the introduction of the tapered annual allowance in 2016 for those with an adjusted income of over £150,000 and a threshold income of over £110,000.
The BMA has said that the rules penalise senior consultants financially when they take on extra work and can discourage them from putting forward innovations on treatments and working practices. Army doctors are also being forced to reconsider their careers as the rules hit their pensions when they rise through the ranks.
“We would very much like to engage with the government to look at ways to address this problem,” Dr Nagpaul wrote. “GPs are being actively encouraged by accountants to reduce their commitment or, for those nearing retirement, to stop work altogether. This will naturally impact on the government’s stated aim to attract 5,000 new GPs in England by 2020.”
One of the main rules that doctors have asked to be changed relates to the annual allowance charge in defined benefit schemes of public sector pensions. Concerns about this rule have been echoed by other unions, representing police, firefighters, dentists, nurses, and civil servants, among others.
“The unions representing these groups have advised on the significant recruitment and retention problems arising from staff being unwilling to attract a pay increase from a promotion or to undertake additional work, for fear of our potential to attract an annual allowance charge,” Dr Nagpaul’s letter stated.
The BMA is calling for greater flexibility for a range of complex pension rules which make it difficult for members to work out and control their pensions.
“For many, they feel that the only solution is to opt out of scheme membership. Not only may this not be in their best interests but is certainly not in the interests of the NHS pension schemes.”
Despite these fears, Chase de Vere Medical head, Andrea Sproates warned that doctors’ accountants may be giving recommendations based solely on tax issues without considering doctors’ overall personal and financial circumstances, which could be leading to them unnecessarily opting it of their pensions.
Sproates added that accountants could be giving the wrong advice through a “lack of understanding” of how the tapered annual allowance is calculated in regards to the NHS Pension Scheme.
“This means that many doctors are choosing to stop paying into the NHS Pension Scheme when this is likely to be the wrong decision for them. While they could face additional tax charges by staying in the scheme, if they leave they will miss out on valuable pension and ancillary benefits, which are likely to be much higher than the possible tax charges.
“What’s even more worrying is that an increasing number of doctors are considering retiring early, in part because of these pension concerns. As a country, with the NHS under significant pressure, our health system can ill-afford to lose so much experience and expertise.”