BMA says the Chancellor missed vital chance to stop doctors being forced to leave the NHS over absurd pension taxation rules

by BMA media team

Press release from the BMA.

Location: England
Published: Thursday 28 October 2021

Responding to the Budget, the Chair of the BMA pensions committee, Dr Vishal Sharma said,  

"It’s so frustrating to see the Chancellor missing an important opportunity to help keep thousands of doctors working in the NHS. He absolutely should have reformed the long-standing issues with pension taxation to avoid affected doctors reducing their working hours or retiring altogether. 

"It’s all very well announcing almost six billion pounds worth of capital investment for the NHS, but without plans to increase staffing or, crucially, to ensure that we retain the doctors we have, the impact on the huge backlog of patients needing care will be minimal."​

Pension tax has a major impact on doctors’ ability to care for their patients. It can lead to the perverse outcome that many doctors may face financial detriment if they undertake additional work or work for longer in the NHS. As a result, doctors have been left with little alternative but to reduce their working hours at a time when waiting lists are at their highest for many years and the NHS is already facing a huge staffing crisis.

Dr Sharma continued: 

"As a result of tiered contribution rates in the NHS pension scheme, doctors and other higher earners in the NHS do not benefit from higher rate tax relief, yet they are still subject to both the annual and lifetime allowance, which seek to limit this non-existent tax relief. This can result in doctors facing large, unexpected tax bills simply because of doing their normal day job. The only way that these tax bills can be mitigated is by working less or retiring early. Indeed, the current level of the lifetime annual allowance remains a powerful driver of early retirements, at a time when we need to maximise workforce capacity in the NHS to address the backlog of patients requiring treatment following the COVID-19 pandemic.  

"The Government has already shown that reform is possible with the changes brought to the judges’ pension scheme in response to similar issues with recruitment and retention. Yesterday the Chancellor could have shown a willingness to explore similar solutions for doctors and for other high earners in the NHS. The BMA believes the introduction of a similar tax unregistered defined benefit pension scheme across the UK for those affected in the NHS would solve the current issues within the pensions taxation system and enable doctors to provide the care that patients need without the fear of incurring large punitive tax bills in the process."   

In the absence of any real positive action from the Chancellor to address the impending workforce crisis in the NHS, the BMA says the Government, in the interim, should support hospital trusts to enable doctors to access employers’ pension contributions if they are forced to opt out of the scheme. However, to properly address the current backlog of care, we call on the Chancellor to address the issues of pension taxation at the earliest opportunity.  

ENDS

Notes to editors

The BMA is a trade union and professional association representing and negotiating on behalf of all doctors in the UK. A leading voice advocating for outstanding health care and a healthy population. An association providing members with excellent individual services and support throughout their lives.