Govt should extend proposed NHS pension tax plan across public sector – army chief

The government has been urged to extend its proposed solution to fix the NHS pensions taxation crisis across the public sector.

Speaking to the Financial Times, Major General Neil Marshall, who is chief executive of the Forces Pension Society, and was previously one of the UK’s highest-ranking army officers, called for the tapered annual allowance to be scrapped.

However, he has also urged the government to extend concessions it has proposed for NHS staff across the whole of the public sector.

Earlier this month, the government scrapped plans to introduce a 50:50 system for NHS staff pensions as a solution, instead offering full flexibility over the amount clinicians can put into their pensions.

The Department of Health and Social Care (DHSC) has said it will publish a consultation on a new set of proposals shortly. The new rules will be introduced in the next financial year, and will allow senior clinicians to set the exact level of pension accrual at the start of each year.

For example 30 per cent contributions for a 30 per cent accrual rate, or any other percentage in 10 per cent increments depending on their financial situation. This would give them room to take on additional work without breaching their annual allowance and facing tax charges. Employers would then have the option to recycle their unused contribution back into the clinician’s salary.

It is these concessions that Marshall believes should be extended: “There is a direct readacross from the NHS to those military medical professionals serving in the Defence Medical Services, many of whom work alongside their NHS colleagues every day but have the additional liability to serve in a potentially life threatening combat situation worldwide at short notice,” he told the Financial Times.

“Unlike their NHS contemporaries, as it currently stands, the flexibility being offered to the NHS will not apply to the Defence Medical Services. This cannot be right.”

Upon publishing its plans, the government also said that HM Treasury will review how the tapered annual allowance supports the delivery of public services such as the NHS.
Marshall believes that the tapered annual allowance should be scrapped, “but that should only be the first step in a broader review that addresses the unintended consequences of the reductions in the annual allowance threshold”.

“That aspect of pension tax is having a particularly negative impact upon the broader Armed Forces community,” he told the paper.

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.

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