Pension tax issues need ‘decisive action’ from new govt

The pensions industry has called for “decisive action” from the incoming government on pensions tax issues, specifically those affecting the NHS and public sector workers.

Within its campaign manifesto, the Conservative Party pledged to hold an ‘urgent review’, in collaboration with the British Medical Association (BMA) and Academy of Medical Royal Colleges within the first 30 days of being elected.

However, the BMA have since stressed the need “for decisive action” from the incoming government, with BMA council chair, Dr Chaand Nagpaul commenting that “a review is not enough”.

In a letter to the Prime Minister, Nagpaul, stated:” The BMA is absolutely clear that the only solution to the current unjustifiable problem impacting doctors and ultimately patient waiting times, is removal of the taper and annual allowance for defined benefit schemes such as the NHS Pension Scheme.”

Nagpaul also stressed that this recommendation was in line with those made by the Office of Tax Simplification, and confirmed that the BMA will be requesting an “urgent meeting with the Chancellor”.

The issues around the taper allowance have been cited as a motivating factor for doctors choosing to retire early or cut back on hours, with Nagpaul adding that “punitive pension rules which are forcing doctors to reduce their work or even leave the NHS.”

Eversheds Sutherland partner, Emma King, agreed, stating that: “There is a crisis currently with senior clinicians not working overtime due to unexpected tax bills – we can expect urgent action on this by the new government.”

While the review has been welcomed by the pensions industry, Hymans Robertson partner, Sue Waites, agreed that broader work was needed to simplify pension tax issues.

Waites commented: “I welcome the Conservative manifesto’s commitment to urgently review the complex taper affecting doctor’s pensions, however the problem does stretch far wider than that.

“Now that they’re in government, we’d like to see them take this opportunity to demystify the complexity surrounding tax relief and in particular to commit to simplifying the overly complex issue of annual allowance that is effectively stopping key workers such as NHS doctors from working more hours due to tax.”

Aegon’s pension director, Steven Cameron, echoed this sentiment, adding: “Tax rules and reliefs must be fit for the future and work together without unintended consequences across all earnings bands.

“It can’t be acceptable that complex technicalities are leading to senior health professionals in the NHS refusing extra work or retiring early to escape pension tax charges. A full review is urgently needed, and not just a temporary sticking plaster for the NHS.”

    Share Story:

Recent Stories

DC master trusts
Pensions Age editor Laura Blows, editor of Pensions Age look at developments within the DC master trust market with Paul Leandro, partner at Barnett Waddingham, and Mark Futcher, partner and head of DC at Barnett Waddingham.
Investing in Asia
Pensions Age editor, Laura Blows, discusses with CRUX Asset Management fund manager, Ewan Markson-Brown, the opportunities for investing in Asia and CRUX Asset Management's fund launch to help with this

Advertisement Advertisement