Govt has ‘no plans’ to make NHS Pension Scheme tax unregistered

The government has stated that it has no plans to make the NHS Pension Scheme tax unregistered as a means to reduce the number of senior staff retiring early due to tax bills.

In response to a petition that called for the scheme to be tax unregistered, as with the Judicial Pension Scheme, the government argued that the change “would not benefit” the vast majority of members.

Debate has continued to grow about how to halt the exodus of high earners in the NHS who are being hit by annual allowance and lifetime allowance charges.

The petition argued that the tax bills resulting from annual pension growth can leave senior staff choosing to take on less work to reduce their tax bill.

“If the government made the scheme tax unregistered then senior staff will surely be more willing to undertake extra clinics, extra operating lists and contribute to the reduction in waiting times which have grown significantly since the pandemic,” it continued.

“It is perversely punitive that staff who undertake additional sessions can be faced with a tax bill of more than what they earned for those sessions.”

In its response, the government said a tax unregistered scheme would remove tax relief on pension contributions, “which is a valuable benefit designed to incentivise retirement saving”.
“The annual and lifetime allowances restrict the cost of tax relief and ensure the incentive to save is targeted across society,” it stated.

“The vast majority of NHS Pension Scheme members are able to build their pensions tax-free. Therefore, a tax unregistered pension arrangement would not benefit the vast majority of NHS Pension Scheme members, as it would mean that they lose tax relief on their contributions.

“An unregistered scheme would also mean that members lose the benefit of a tax-free lump sum of up to 25 per cent of the value of their pension on retirement.”
At the time of writing, the petition has gathered 11,206 signatures.

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