NHS doctors to reduce working hours unless their pensions are reformed

25 April 2019

The British Medical Association (BMA) has warned the Chancellor that unless the government makes ‘tangible’ improvements to the NHS pension, doctors will start reducing their working hours.

The BMA says that pension rules and the tax system have conspired to create a ‘perfect storm’ that could force senior consultants to either reduce their working hours, retire early or quit the NHS to avoid disproportional additional tax charges on their pensions.

Earlier this year Moneywise reported on the number of doctors who were opting out of the NHS pension through fears of incurring punitive tax charges.

In the latest of a series of letters to Chancellor Philip Hammond, the BMA warns prevailing tax and pension regulations could effectively drive out some of the UK’s most skilled and experienced doctors and have a serious knock-on effect on patient care.

Dr Rob Harwood, chair of the BMA says: “It cannot be right that doctors working extra hours to reduce waiting lists or cover rota gaps are then hit with additional tax bills greater than the value of the extra hours worked. 

“Given the refusal of both the government and NHS employers to take steps to rectify or mitigate this, it is now our responsibility to inform our members that current regulations, particularly the annual allowance and tapered annual allowance, are disproportionately and unfairly impacting them.

"Unless action is taken, our only option is to reduce the amount of time we work for the NHS, which will through no fault of our own, be detrimental to our patients and to the country’s health service.”

“Having written to the Chancellor several times on this matter, we are disappointed the government has neither listened to us or advanced any proposals of its own to address the urgent issues we highlight, or even to acknowledge the solutions we recommend.”

Ian Brown, pensions expert at Quilter says that reductions to the annual and lifetime allowances over the last 10 years have drastically limited the amounts doctors are able to pay in. 

“For those that are maximising their allowances, they can be penalised with harsh tax penalties and may end up in a worse financial position as a result. That is a perverse disincentive to save for the future," he says.

“Most schemes and employers have the flexibility to opt out and use other tax advantages savings vehicles once the pension is maxed out. This allows people to plan their affairs properly with the help of an adviser. But in the case of the NHS scheme, reducing contributions isn’t possible so employees are locked in to a tax charge unless they stop accruing money, which means stopping working.”

He adds: “That cannot be the right outcome for anyone, least of all the staff and patients of the NHS. When a complex area of savings taxation is impacting on vital frontline services, something has gone badly wrong. This is really putting pension rules, a subject which most people know little about, right into the heart of a key discussion about the health service.

"Hopefully it will raise awareness of the backwards steps that have been made in savings tax reforms in recent years and force a rounded discussion about how this impacts on behaviours. For too long government have focussed only on cutting the cost of tax incentives, rather than the effect this has on our working lives and savings patterns.”


In reply to by anonymous_stub (not verified)

I left the NHS 5 years ago and this was one of the reasons. Docs were having to spend a lot of time doing complex involved calculations on annual allowance, and trying to forecast if they would hit the limits on this or LTA and thus be penalised. In some cases getting a promotion or doing overtime was threatening big tax bills. Many docs were leaving the NHS scheme temporarily or permanently, which is a problem as their huge contributions (in my final years 27% of my income) kept the scheme in surplus and returning cash to the Treasury. Despite my best efforts I got hit with a £12 000 tax charge one year as my calculations were slightly out when our year end profits came in. Many colleagues were going part time or taking early retirement. I left the NHS in my early 50s for many reasons including the workload, stress and bureaucracy, but the mind boggling complexity and perverse disincentives of this was another factor.

In reply to by anonymous_stub (not verified)

Years ago, doctors were revered, held in high esteem and respected. They enjoyed a special status in the community and hospitals. Today that's all changed. With the growth in UK population, many more discovered diseases and conditions, doctors are no longer given the respect or status they used to enjoy. Now Medicine is treated as a conveyor belt. They are expected to work longer hours (my operation is now taking place on a Saturday morning - unheard of a few years ago) and communities no longer look up to them for their skills. And they don't like it. Nowadays it's been downgraded and reduced to the status of a motor mechanic.

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