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  3. The fight to end the pension tax trap continues
Feature Workforce Crisis

The fight to end the pension tax trap continues

BMJ 2019; 366 doi: https://doi.org/10.1136/bmj.l5135 (Published 21 August 2019) Cite this as: BMJ 2019;366:l5135

Linked opinion

Paul Youngs: Pension tax reform needs to be swift to tackle doctors’ sense of injustice

Linked editorial

NHS pensions crisis

Linked news

Pension crisis: trusts take matters in their own hands
  1. Melanie Newman, freelance journalist, London, UK
  1. melanienewman999{at}gmail.com

Changes announced by the government this month will bring welcome relief to thousands of doctors—and NHS patients. But the underlying problems remain. Other public servants face similar problems, and they’re also fighting back, reports Melanie Newman

The prospect of lengthening NHS waiting lists and a consultant exodus to avoid massive tax bills led to the government promising on 7 August “immediate action” and a consultation on giving senior clinicians more flexibility in how much they can pay into their pension pots.1

Waiting lists have risen by 50% in some hospitals because doctors have declined extra shifts.2 Rules from 2016 imposed new limits on how much higher earners could contribute to their pensions without incurring tax charges. A tapered annual allowance gradually reduces the tax free limit. About a third of NHS consultants and GP partners were affected, the government said.

The rules are complex, and some doctors have received huge unexpected tax bills after exceeding the new limits, effectively paying more to work more.34 To avoid that risk some doctors have reduced their hours, retired early, or quit the NHS pension scheme.5

Proposed new rules

The government has proposed new rules that from the next financial year would allow senior doctors to decide the exact level of their pension contribution at the start of each year so they could do extra work without breaching the limits.

Employers and doctors could stop contributing to the pension once the level is reached, and employers could choose to pay their contribution into doctors’ salaries instead so that doctors do not lose out on the value of their employer’s share.

This financial year, employers will be given guidance to offer local flexibility so that doctors can opt out of the NHS pension scheme mid-year. Employers can use “discretionary flexibility” to maintain the …

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