Government proposals on the NHS pensions tax crisis has been branded a “convoluted fudge” and “extremely likely to fail”, according to the pensions industry.

In the government consolation published yesterday (22 July), it outlined a 50:50-type model, but refused to scrap the controversial tapered annual allowance which is causing doctors to cut down their working hours or retire early.

The industry has widely criticised the consultation, with a British Medical Association (BMA) advisor on pay and pensions, Dr Tony Goldstone, tweeting in response: “This consultation is: Too Little; Too Late; Too Narrow. It’s going to take a Too Long, and as they have not listened it is, I am afraid, extremely likely to fail. They need to #ScrapTheTaper."

Under the proposals, clinicians can reduce their pensions accrual by 50 per cent, as well as paying 50 per cent lower contributions, a move which the government accepts “does not provide unlimited flexibility” and recognises that “some clinicians may continue to experience annual allowance tax charges”.

In response, the BMA said: “This consultation does little other than add to the intolerable dilemma facing many doctors – a commitment to their patients put in jeopardy by these ridiculous taxes which are forcing doctors to effectively pay to go to work.



“Doctors need to be able to return to doing the additional work they had routinely undertaken in the past to ensure high quality, safe patient care. We believe an effective consultation should have explicitly included the option to scrap the annual allowance or tapering annual allowance.”

The BMA added that the government needs to consider a “fully flexible approach”, such as scaling the pension membership from 10:10 to 90:90, each with recycling of the residual employer contributions, but that “the BMA believes the only real solution is to scrap the annual or tapering allowances with immediate effect.”

The government has been repeatedly warned of a “workforce crisis” should it not address the crisis, and AJ Bell senior analyst, Tom Selby, said that the government’s refusal to ditch the taper has forced the Department of Health and Social Care into “something of a convoluted fudge”.

“While introducing flexibility so members can reduce accruals and thus mitigate any tax bills resulting from the annual allowance will help to a degree, it is inevitable many will simply choose not to work the extra shifts rather than jump through hoops which will ultimately lead to a lower pension,” he said.

“The Treasury needs to bite the bullet, accept the pension tax taper is simply a bad policy and scrap it altogether.”

The government has said it is “open" too solutions on the issues, and is looking for stakeholders to give their thoughts on how it should move forward.

Also commenting, Quilter head of retirement policy, Jon Greer, said the proposals are nothing more than a “sticking plaster”.

“Since it also refuses to abolish the annual allowance taper, the only option for the government is to retro-fit this backdoor solution into the design of the NHS scheme in order to try and alleviate some pressure on doctors,” he said.

“A far simpler option would be to scrap the taper altogether, which is the root cause of the problem. This would also help to make sure that other public sector workers faced with the same problem are not also affected by the taper.”

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