Is There a Pension 'Fix' to Ease Winter NHS Pressure?

Peter Russell

November 19, 2019

Plans have been reportedly drawn up for the NHS to settle some doctors' tax bills to persuade senior staff to work extra hours.

The British Medical Association (BMA) said the scheme could ease pressure on the health service during the winter.

The Government has been repeatedly warned of the effect on the NHS caused by doctors reducing their hours to escape punitive tax bills.

Earlier this month, the Academy of Medical Royal Colleges wrote a letter to the Chancellor of the Exchequer and the Secretary of State for Health and Social Care warning that the pensions issue was undermining staff morale and affecting recruitment and retention of the medical workforce.

It warned that it had put the NHS "at risk" because it had "become entirely dependent on consultants delivering service provision over and above their existing contracts".

Caught by the Taper

Recent changes to pension taxation have led to a situation where higher earning medical professionals could see their pensions growing to a level beyond their tax-free allowance.

For very high earners, the taper could squeeze the annual allowance to just £10,000.

Scheme members were also subject to a lifetime allowance of £1.02 million.

Earlier this year, ministers published a consultation to changes on pension rules in which senior doctors and nurses would be allowed flexibility to set their own pension contribution levels.

On Monday, the BBC reported that senior personnel in the NHS and government ministers had agreed a temporary plan in which doctors would be allowed to withdraw money from their pension pots to settle their tax liabilities next year.

The NHS would then top up their pension pots before retirement, ensuring that the cost to the health service of reimbursement was spread over time while also ensuring that doctors were not out of pocket.

The emergency measure would only apply to the 2019-20 tax year, the report said.

Dr Chaand Nagpaul, BMA council chair, said: "The BMA has been in active discussion with NHS England about what short-term options, including this interim measure, could be implemented to allow doctors to resume additional work over the coming winter period.

"These proposals under discussion could, if properly implemented, provide the respite needed to enable significant numbers of doctors to increase the work they are doing, giving vital patient care at a time of unprecedented demand.

"However, we don't yet have important details about how such a scheme will work; details that are crucial to the BMA and to the tens of thousands of doctors that we represent in order to provide the necessary reassurance that doctors can take on additional work without this resulting in any financial penalty.

"We look forward to having those details in the very near future, and call on the next Government to urgently scrap the annual allowance in defined benefit schemes such as the NHS, a solution proposed by their own advisory body, the Office for Tax Simplification."

Scotland Announces Temporary 'Fix'

Yesterday, the Scottish Government announced plans to ease the NHS pensions crisis with a temporary policy to give NHS staff likely to breach the Annual Allowance in the 2019/20 financial year the option to get their employer pension contributions paid to them as part of their basic pay.

Jeane Freeman, Cabinet Secretary for Health and Sport, commented: "This will make a significant contribution to supporting frontline services and medical specialities who are working round the clock to deliver the highest possible quality of care."

The interim policy would apply from 1st December 2019.

Dr Graeme Eunson, the BMA's Scottish Consultants Committee chair, said that "while we welcome this move, more fundamentally we need UK-wide tax reforms before the end of this financial year in order to prevent these bills from hitting doctors again next year".

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