The NHS will face “a perfect storm” unless it extends the NHS Scheme Pays deadline and the end of the abatement rules, Quilter has warned.
In a letter to the new health secretary, Steven Barclay, Quilter requested two specific actions that would “significantly” benefit healthcare workers, namely, the extension of the 2020/21 NHS Scheme Pays deadline and the continuation of the extension of the end of abatement rules.
Quilter’s intervention comes at the same time as the release of a report from the Health and Social Care Committee titled, Expert Panel: Evaluation of government’s commitments in the area of the health and social care workforce in England, which found that the number of full-time equivalent GPs fell by over 700 in the three years to March 2022.
The report urged the government to take action to address the ongoing pension tax issues forcing doctors to reduce their hours.
Scheme Pays allows savers to settle annual allowance tax charges through their NHS pension without needing to find cash up front, according to Quilter, and, while the government has lifted the ‘adjusted income’ and ‘threshold income’ levels under the Tapered Annual Allowance by £90,000, the standard annual allowance of £40,000 is still an issue for some doctors.
Quilter argued that extending the deadline would ensure that doctors are able to exercise the options to use Scheme Pays.
Meanwhile, Quilter said that the suspension of abatement rules has allowed recently retired NHS staff to return to work and tackle the pandemic and NHS backlog without suffering a penalty on their pension, but this temporary suspension comes to an end on 31 October 2022.
Quilter has warned that once the rules end, NHS workers’ pensions will be reduced pound for pound if their earnings plus the 'unearned' element of their NHS pension exceed their pre-retirement NHS pensionable earnings.
Figures obtained by Quilter through a Freedom of Information request earlier this year revealed that over 7,000 doctors and nurses could be at risk of a financial penalty on their pension once the Coronavirus Act powers expire and could therefore leave the health service as a result.
Quilter NHS pensions specialist, Graham Crossley, commented: “The NHS is facing significant headwinds at the moment, which will be compounded by issues surrounding NHS pensions. This is creating a perfect storm where healthcare workers are suffering penalties on their pensions or not being given adequate time to file complicated pension tax paperwork when they have other things front of mind like helping the health service get back on its feet.
“Doctors are risking their lives and the least we can do is ensure they are not being financially penalised for it. This week’s report from the Health and Social Care Committee specifically calls out ‘pensions taxation’ as one of the issues causing some doctors to reduce the number of hours they worked or retire early.
“Finally, there is a realisation that the government’s changes to Annual Allowance Taper was a sticking plaster that failed to address the complexities of NHS pension and taxation.
“On top of this, time is ticking before thousands of the NHS’s most senior doctors and nurses are forced to choose between continuing to treat patients or suffer a penalty on their pension. It is absurd that a raft of experienced professionals may leave the sector come autumn simply because the government haven’t extended the cessation of abatement rules.”
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