Too many doctors could be mistakenly leaving the NHS Pension Scheme over potential tax charges, meaning they miss out on valuable pension benefits, Chase de Vere Medical has said.
The medical arm of the independent financial advisers said that the number of doctors stopping their pensions contributions, or even retiring early, is increasing due to fears of tax charges if their pensions assets become too large.
According to the group, 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 changes meant that doctors could be facing an annual allowance tax charge on contributions and a lifetime allowance charge on benefits.
Chase de Vere Medical head, Andrea Sproates, said: “Doctors are talking about their concerns among themselves or may be taking advice from their accountants. However, accountants may be giving recommendations based solely on tax issues without considering doctors’ overall personal and financial circumstances.”
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.”