Industry criticises Javid’s ‘missed opportunity’ to fix pension tax problem

Several industry voices have criticised the Chancellor, Sajid Javid, for not using his Spending Review to the fix the pensions tax issue that is causing staffing issues in the NHS and across the public sector.

Documents published alongside the Chancellor's Spending Review delivered today, 4 September, revealed that funding for employer pension costs for schools will rise from £0.9bn in 2019/20, to £1.5bn a year from 2020/21 to 2022/23.

He also announced an extra £700m for the Ministry of Defence to address an increase in employer pension contributions.

However, Royal London director of policy, Steve Webb, described the review as a missed opportunity, as he believes Javid should have used the policy to remedy the pensions tax problem affecting the NHS and public sector currently.

“NHS services are now being seriously impacted by GPs and senior doctors choosing to retire prematurely or cut hours because of tax relief limits. This issue needs to be addressed as a matter of urgency. Today’s statement was a missed opportunity to address that urgent problem,” Webb said.

This sentiment was echoed by Aegon pensions director, Steven Cameron, who said the additional funding for the NHS will be welcomed but he didn’t fix the pensions taxation issue, which is causing a “dangerous drain on talent”.

“While the NHS needs money, it also needs to retain its talent. It can’t be right that a little known technical pensions rule is putting that at risk. We urge any doctor considering retiring early to first seek professional financial advice.

“While the immediate priority may be to stop this NHS talent drain, the issue affects individuals across employment sectors. A solution which picks certain occupations for special treatment would be unfair and divisive. This means we need a solution which applies across the country, encouraging rather than penalising saving for retirement,” Cameron said.

    Share Story:

Recent Stories

Bulk annuities during coronavirus
Laura Blows speaks to Just business development manager Prash Mehta about the impact of coronavirus on transactions

Investing in infrastructure
Laura Blows speaks to James Dawes about how, and why, pension funds should be looking at infrastructure as an investment opportunity

Re-shaping the future of fiduciary management?
Pensions Age Editor, Laura Blows, speaks to River and Mercantile co-head, Ajeet Manjrekar, about the future of fiduciary management in the UK

Pensions Age Editor, Laura Blows, speaks to Christopher Rossbach, CIO and Portfolio Manager of the J. Stern & Co. World Stars global equity strategy about the investment opportunities for global equities in these unprecedented times.