High earning NHS consultants, GPs and senior staff could retire earlier than expected in order to avoid higher tax bills created by changes to pension scheme taxation rules.

MyCSP, the administrator for the Principal Civil Service Pension Scheme, has said the reductions in pension taxation limits will affect anyone earning from £94,000 with a full career in the NHS, and may also hit those earning over £45,000 a year if they have over 20 years’ service and receive a significant promotion.

From 6 April 2014, the Lifetime Allowance reduced from £1.5m to £1.25m and the Annual Allowance also reduced from £50,000 to £40,000.

MyCSP said employees may feel disaffected "as they could view the changes as fundamentally altering one of their key employee benefits".

Many employees will only become aware in the next three months when they receive their pension savings statements or when they request a pensions estimate.

"We would advise NHS employers to identify anyone that might be affected and inform them of the options available to them and the action they need to take," the administrator said.

"NHS Pension Scheme members who are likely to breach the limits should consider when they plan to retire, the amount of cash they plan to take, how their pay might increase in future, further pensions savings from other employers, dependants’ benefits and options for flexible working.

Current members also need to consider whether they would like to apply for Individual Protection from August 2014 until April 2017 to protect their current Lifetime Allowance," it added.

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