Most NHS workers would not benefit from LTA exemption, says Govt

Offering NHS workers provisions to mitigate against the effect of the pension lifetime allowance (LTA) freeze would not benefit the vast majority of them, according to Economic Secretary to the Treasury, John Glen.

Responding to a written question from Scottish National Party MP David Linden, Glen stated that offering the workers a provision similar to that received by members of the judiciary would see them receive no tax relief on their contributions.

Explaining the changes to the judiciary scheme, he continued: “The unique circumstances of judiciary appointments mean that it is necessary to reform their pension arrangements. Judges are not able to work in private practice after taking up office, and many judges take a significant pay cut to join the judiciary.

“The combination of these factors is why the government is committed to introduce a reformed judicial pension scheme.”

The government published its response to a consultation on reforming the judicial pension scheme back in February, with proposals stating that members would be able to make retrospective choice of pension scheme membership backdated to 1 April 2015 until March 2022.

It was also confirmed that there would be no annual allowance or taper, and no LTA in the reformed scheme.

Linden had asked what assessment the Chancellor and his department had made of the potential merits of providing similar provision to NHS workers to that offered to the judiciary to mitigate against the effect of the pension lifetime allowance freeze on NHS workers.

Glen argued that more than nine out of 10 (92 per cent) individuals approaching retirement over the next 5 years will have a pension below the LTA and so will not be affected by the freeze, while also emphasising the high cost of pensions tax relief.

He also stated: “The NHS remains the government’s key spending priority. This is why the government is increasing the NHS budget in England from £114.6bn in 2018/19 to £148.5bn in 2023/24. The government has also provided unprecedented support during the Covid-19 pandemic.

“As of 3 March 2021, taking into account the significant funding announced at Spending Review 2020 and Budget 2021, total support provided for the economy is £352bn across 2020/21 and 2021/22, or around 17 per cent of 2020 GDP. The government must make responsible decisions to ensure the process of returning the public finances to a sustainable path is not harder than it needs to be.”

However, the lack of action on LTA could risk senior staff leaving the NHS, as the government was warned last year that almost half (44 per cent) of all NHS trust leaders were considering, or already planning, to leave the public health service because of the ongoing pensions crisis.

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