Chancellor listens to BMA with pension taxation reform to help keep senior doctors in the NHS

by BMA media team

BMA press release.

Location: England
Published: Wednesday 15 March 2023
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The BMA says years of lobbying the Government to make changes to the punitive pension taxation rule for doctors have finally been heard. Today’s announcement by the Chancellor comes after years of campaigning by the BMA, and more recent  intensive talks with Treasury officials, and should effectively close the floodgates to keep more senior doctors in the NHS workforce.   

The pension taxation rules were financially penalising thousands of senior doctors, leaving many with little option but to reduce their hours or retire early. This is at a time when millions of patients are on ever-growing waiting lists, desperately needing the expert care that senior doctors provide.

This important announcement by the Chancellor - scrapping the lifetime allowance and increasing the annual allowance to £60,000 - will significantly address this issue. It will mean the vast majority of doctors will no longer receive huge pension tax bills and so is a significant boost in helping to retain doctors in the NHS. However, it doesn’t address all the issues and the BMA will support those doctors who continue to be impacted by such bills, including those affected by the tapered annual allowance that has not been meaningfully reformed. The BMA will continue to campaign on their behalf so that they take on additional shifts and overtime without fear of being penalised in the process.

The chair of the BMA Pensions Committee and chair of the Consultants Committee Dr Vishal Sharma said: 

“Today’s announcement is an incredibly important step forward and the result of year after year of lobbying and campaigning for changes to pension taxation by the BMA. The scrapping of the lifetime allowance will be potentially transformative for the NHS as senior doctors will no longer be forced to retire early and can continue to work within the NHS, providing vital patient care.  We are pleased that the Chancellor has acted decisively to avert a major workforce crisis, as a failure to do so would have resulted in a major risk to the NHS, to our patients and to the junior doctors we mentor and train. 

“The rise in the annual allowance will mean far fewer doctors will receive large punitive pension tax bills and will significantly reduce the perverse incentive to reduce hours due to pension tax. It’s also very welcome that the Government have committed to addressing the anomaly of ignoring any negative pension growth and rectifying this will ensure NHS staff can appropriately utilise their full annual allowance. However, the changes don’t address all of the issues and some doctors will still be adversely impacted by the annual allowance  and in particular by the tapered annual allowance which hasn’t been meaningfully modified in these reforms. Consequently, a minority of doctors will still need to navigate the complexity of the annual allowance, an allowance which we believe is completely unsuited to defined benefits schemes such as the NHS. This will mean some doctors will still need to think carefully before taking on additional shifts or doing overtime. We hope to continue our constructive discussions with Treasury in order to find a way forward to address this outstanding issue.

“It is also vital if we don’t want to end up in this situation again that these limits must be kept under review to ensure their value is not eroded in real terms. Otherwise, we will simply find ourselves in the same situation in a few years’ time. 

“Treasury officials have constructively engaged with us over pensions, resulting in today’s announcement. Consultants in England have written to the Government, asking them to come back to us outlining how it intends to fix pay and fix the broken pay review process. We look forward to the Health Secretary being equally engaged and coming back to us with a meaningful proposal.”

Notes to editors

The BMA is a professional association and trade union 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.

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