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Many of you will have seen that the Westminster Secretary of State for Health and Social Care and the Chancellor recently announced that they will finally begin to address the current pensions crisis that’s forcing many senior doctors across Northern Ireland and elsewhere in the UK to either reduce working commitments beyond their contracted hours or take early retirement due to punitive, unexpected pension tax bills.
The announcement includes a new consultation on full pension flexibility, a commitment from the Treasury to review the impact of the annual allowance taper and guidance to be issued to employers setting out how existing flexibilities can be used to ensure doctors do not lose out. We know that flexibilities are, however, too complicated as a long-term solution and unless government commits to 'full and mandatory recycling' as this this represents a pay cut in the long-term.
As taxation is not a devolved issue, we welcome this announcement from Westminster as a positive first step towards pension reform. BMA Northern Ireland and elsewhere in the UK has been campaigning and lobbying extensively for the full reform of these unfair punitive tax bills for taking on additional work.
We await the full detail on Westminster’s proposals and how it will affect Northern Ireland and we are continuing our discussions with the Department of Health in Northern Ireland to ensure that local doctors do not lose out. Last week myself and the deputy chair of the Northern Ireland consultants committee, David Farren, met with the Department’s medical directors, as well as pensions and HR leads for all health trusts. We received verbal feedback that they are looking at how best to implement Westminster’s proposals here and indicated that they are likely to follow the England and Wales model, however the detail of this model is not yet known.
We were also informed in this meeting that Northern Ireland pensions is currently working on expanding timing for scheme pay applications. Pensions are to confirm in the near future that members will be able to apply for scheme pays up to three months from the date of receiving the appropriate information (which is pensionable pay back to 2011/2012). In meantime, members should consider obtaining an estimate of their annual allowance charge from an accountant or independent financial advisor which can be altered in due course.
Ultimately this issue will only be addressed properly and fully with proper tax reform, that includes the overhaul of the annual allowance and scrapping of the tapered annual allowance in NHS defined benefit schemes as this is a barrier to doctors doing additional overtime, which the health service here relies upon us to do.
We will keep you updated on any further developments as they happen.
What can you do to protect yourself?
It is vital to understand what the pension taxation charges could mean for you. If you are a consultant on the 1995 and 2015 NHS pensions schemes use the BMA Goldstone Pension Modeller to see the potential impact of pension taxation rules and what you can do to mitigate the risks of receiving a substantial annual allowance charge
There will be further development of the modeller to cover those consultants on the 2008 pension scheme and other branches of practice across the UK including general practitioners, staff and associate specialists, armed forces doctors and medical academics. These regular updates to the modeller will be exclusively for BMA members.
GPs, SAS doctors, Armed Forces doctors and other hospital doctors visit our website for the latest guidance on annual allowance.