A new consultation into NHS pension changes designed to enable senior clinicians to work additional shifts without facing prohibitive tax bills has been launched.
A third of consultants and GPs are thought to have earnings that would potentially result in them breaching the tapered annual allowance limit if they take on additional shifts, according to the Department of Health & Social Care.
Public sector pensions
Legal challenge in pipeline over teachers and doctors’ pensions
The new proposals, which replace the 50:50 option set out in July, include giving senior clinicians the ability to choose the level at which their pension will grow at the start of each tax year and pay correspondingly lower contributions.
They will also have the option to top-up their pension pot to the maximum amount towards the end of the tax year when their total earnings are clearer.
NHS employers have reported that increasing numbers of consultants are no longer willing to work additional sessions to reduce waiting lists, fill rota gaps or take on additional supervisory responsibilities because of the current pension tax rules.
According to a BMA Scotland survey of 600 doctors, 64.7% had been hit with a tax bill or were expecting one. As a result, more than half said they had reduced their hours or were planning to do so.
The consultation says the new proposals “offer very significant opportunities for senior clinicians to continue to provide additional care for the NHS by tailoring their pension accrual to the level they wish to achieve, taking into account desired pension growth and the tax implications”.
To succeed we need to see NHS employers doing their part and recycling all of the employer contributions. If they don’t it’s still an effective pay cut for doctors for doing extra shifts,” – Dr Phil De Warren-Penny, BMA.
Those who receive large pay rises will also be protected from sudden tax charges on their pension. If a clinician has a large increase in pensionable pay, the amount by which the new pay level contributes towards their pension will be phased over a number of years.
Danny Mortimer, chief executive of NHS Employers, said giving staff greater flexibility over their own pension would have a positive impact on NHS service capacity.
“These new proposals helpfully acknowledge that more scheme flexibilities are needed, over and above the previously proposed 50:50 section, to help senior clinicians to manage their pension growth within the pension tax allowances.”
However, BMA consultants committee deputy co-chair Dr Phil De Warren-Penny said the proposals would not completely resolve the issue.
“To succeed we need to see NHS employers doing their part and recycling all of the employer contributions. If they don’t it’s still an effective pay cut for doctors for doing extra shifts,” he said.
“The real heart of the problem is the tapered annual allowance which must be removed along with the annual allowance and lifetime allowance. Only when these are removed can doctors return to working extra shifts to help remove waiting list backlogs and support colleagues where there are rota gaps, without fear of receiving huge tax bills.”
The Treasury is reviewing how the tapered annual allowance affects the delivery of public services, the consultation suggests.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
It says: “The Department recognises that, even with the important further flexibilities set out in this consultation, dealing with the complexities of the interaction between tax, pay, pensions and additional work for the NHS can be burdensome for hard working staff.”
The changes, if taken forward, are expected to be introduced in time for the next tax year. The government will work with employers and staff representatives to develop a tool that will help clinicians maximise their clinical work without facing large tax bills.
