BMA rallies against ’50:50’ solution to NHS pension crisis

The British Medical Association (BMA) has written to the government rallying against a “50:50” approach as a possible solution to the NHS pensions crisis.

In a letter to the Secretary of State for Health and Social Care, Matt Hancock, yesterday (30 May), the union said it was encouraged that an announcement on the issue would be made soon, but added that a 50:50 approach “would not provide the flexibility urgently needed”.

The proposal, like the one used in local government pension schemes, allows employees to reduce their pension contributions to 50 per cent, while maintaining employer contributions at 100 per cent.

The BMA wrote: “The fixed 50 per cent arrangement could instead result in many years where the GPs and consultants would still contribute at rates leading to punitive and excessive annual allowance taxation charge and other years where inadequate pension contributions were made by the doctor, leading to a reduced pension at retirement.

“As an urgent interim measure doctors need true flexibility with a range of options and mitigation for excessive annual allowance charges, rather than a fixed 50:50 approach.”

Since the introduction of the annual allowance taper in April 2016, and the lowering of the tax relief threshold from £1.25m to £1m, many consultants are penalised for continuing to pay into their pension fund.

Furthermore, many NHS employees are not in a position to regulate their pension contribution, meaning they will not know until after the event if they have exceeded the savings limit.

Calls have been growing to scrap the taper, which is thought to bring in £6bn of revenue for the government, however last week the Chancellor Philip Hammond ruled this out, describing it as necessary “to create a fair system and protect finances”.

The BMA said it views the Chancellor’s comments and a upcoming announcement as a step in the right direction, but remain convinced that scrapping the taper is the “only realistic solution”.

In April, Hammond said it would be difficult to solve the problem through more tax relief, but a solution could be found by offering more flexibility around the overall remuneration package.

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