NHS pension: doctors’ views sought on “50:50” proposal

The government has launched a consultation on proposals that would allow senior clinicians to halve their pension contributions to avoid big tax charges.1

The “50:50” option, unveiled as part of the interim workforce plan for the NHS in England last month,2 will allow doctors to halve the rate of their pension growth in exchange for halving their contributions to the NHS pension scheme. Currently, the NHS scheme does not offer any flexibility in the rate at which the pension builds, with the highest earning consultants contributing 14.5% of their pensionable pay each month.

This has led to doctors taking early retirement or cutting clinical hours, as they are unable to control their contributions and thus exceed the pensions allowance, which limits what NHS staff can pay into their pensions before tax charges apply. As a result many are left facing large tax bills.3

The Department of Health and Social Care for England said that the improved flexibility of the 50:50 option would allow doctors to avoid cutting their hours, allow them to undertake additional shifts to reduce waiting lists, or take on further supervisory responsibilities.

The BMA has stated that it did not think the 50:50 option would solve the problems doctors’ face. Chaand Nagpaul, BMA chair of council, said, “This option will not only result in doctors receiving a lower pension, but it also does not remove the perverse incentive for doctors to reduce the work they do for the NHS. This is particularly the case if there is no recycling of employers’ pension contributions back to the employees.”

The government’s consultation also proposes steps to improve transparency. Currently working doctors have the option to not pay any tax upfront on money that is saved into their pension. Instead they can choose for the NHS pension scheme to pay the tax bill now, and the scheme will then recoup the tax, plus interest, by taking it off their pension pot at retirement. This is known as “Scheme Pays.”

The consultation proposes ways to make this system more user friendly and clearer in how the deductions are calculated and communicated to clinicians, the government said.

It said that in light of many reports of surgeons, radiologists and other essential staff changing their working behaviour as a result of rising tax charges it was “determined to find a solution that provides the right balance of incentives for clinicians to provide the services that patients need.”

It said it would therefore listen to feedback on the 50:50 proposal and all potential ideas on pension flexibility that arise from the consultation before making changes in time for the new financial year.

Commenting on the consultation, England’s health and social care secretary, Matt Hancock, said, “We want to make it easier for our hardworking senior doctors to balance their workload, their pension pot, and their tax bill—with more flexibility, more choice, and less need to pay upfront.

“It’s vital any changes are based on real experiences, and I urge all consultants, senior nurses, and GPs to have their say.”