NHS loans £35m to pension allowance limit breachers

The National Health Service (NHS) paid £34.7m in tax charges in 2016/17 after thousands of its staff breached pension savings limits, according to data disclosed to the Financial Times by the NHS.

Nearly 4,000 active savers working for the NHS requested that it provides a loan to pay for the annual allowance charges they had accrued after breaching pension saving limits.

The average amount paid by the NHS to cover its scheme members' tax bills was £14,000, according to the NHS Business Services Authority, and totalled £34.7m.

Concerns have been growing about the number of members leaving the NHS pension scheme, with the annual allowance limit being cited as one of the key factors for the exodus.

The British Medical Association (BMA) recently released a survey which found that six out of 10 of NHS consultants retiring early cited the penalties incurred by breaching pension allowance limits as the main reason.

BMA consultants committee chair, Rob Harwood commented: “It cannot be right that these unfair regulations are landing hard-working doctors with exorbitant tax bills for simply doing their jobs to the best of their abilities and are forcing them to cut back on the work they are already doing for the NHS.”

The tax charges are paid by the NHS through a system called 'scheme pays', in which the NHS recoups the tax charge costs by reducing its members' pension incomes, while charging 2.8 per cent interest per year.

This can result in higher future bills for NHS pension scheme members.

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