Health Secretary in talks with Treasury over pension tax rules

The Health Secretary Matt Hancock is in discussions with the Chancellor to try to change the current pension tax rules, which is damaging the recruitment and retention of doctors.

Talking to Pulse Today, Hancock said that tax charges on pensions is the “biggest concern I have raised with me” by GPs.

The introduction of the tapered annual allowance in April 2016, and the lowering of the tax relief threshold from £1.25m to £1m, has meant that some GPs see no benefit in continuing to pay into their pension fund.

Last week, NHS employers have urged the Treasury to review the impact of current pension tax rules, arguing the current system could “damage the perceived value” of the NHS Pension Scheme.

Submitting their response to the NHS pay review body 2019/20, employers said that current tax allowances are making the scheme “less attractive” to high earners, with some staff cutting down their hours, retiring early or leaving completely as a result.

According to NHS employers, if the trend of high earners leaving the scheme continues, there could be an impact on the “yield and the ongoing sustainability of the scheme”.

Despite this, Quilter pensions expert, Ian Browne, believes Hancock’s request will fall on deaf ears as the Treasury “won’t want to carve out a whole set of separate rules for the taxation of doctor’s pensions”.

“Differing pension rules for different professions is at best unfair and serves to complicate an already incredibly complex system.

“Similarly, if the treasury decided they would change lifetime allowance rules for all going forward then you are still left with a group of people who have suffered with the consequence of these rules for a period of time and will likely want recompense. Funding that would hit government coiffures hard,” he said.

Earlier this month, a Freedom of Information request by the Health Service Journal revealed that nearly a quarter of a million (245,561) NHS workers have opted out of the NHS pension scheme in the last three years.

Another Freedom of Information request from Royal London found that the opt-out rate of NHS employees was 16 per cent, compared to 3.4 per cent for the teachers’ scheme, 1.45 per cent for the civil service scheme and 0.04 per cent for the armed forces scheme.

    Share Story:

Recent Stories


Addressing climate change risk in fixed income portfolios
Francesca Fabrizi meets Lee Clements, director of SRI research at FTSE Russell, to discuss climate change risk in investment portfolios

The modern age
Deputy editor Natalie Tuck chats to the ABI’s Yvonne Braun about her work at the ABI and her thoughts on key pension topics