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You will no doubt be aware that the current system of punitive pensions taxation is forcing consultants to reduce the hours they work for the NHS. However, this is not the only detrimental effect of these ill-conceived pension tax policies.
Consultants are shying away from taking on managerial roles and reducing their education and teaching commitments. Furthermore, for many consultants the incentive to strive for excellence, so as to drive forward the delivery of the best possible care for our patients, has been lost. We are hearing widespread reports that the number of applicants for LCEAS (Local Clinical Excellence Awards) has dropped dramatically. Although following agreement with the BMA, new LCEAs are non-pensionable and hence receipt of a new award doesn’t lead to an increased pension input amount. The non-pensionable earnings can tip people over the threshold income ‘cliff edge’ or be almost entirely consumed in additional taxation. It is, therefore, understandable that consultants are reluctant to apply for them. However, these awards form an important part of consultant pay and there is a contractual obligation on trusts in England to spend all of this money each year. This is posing problems in some areas where they have been reports of difficulty in spending all of the money due to the reduced number of applicants.The BMA perspective is that these awards are pay and as such must be used for that purpose. In addition, we believe that, as far as possible, LNCs should not agree to roll over awards to a following year as the problem is likely to be exacerbated in subsequent years. Similarly, LNCs should not agree for this money to be used to pay for study leave or improving on-call facilities. Trusts are already obliged to offer these as appropriate. A further consideration is that employer-based award committees should begin moving away from the old style of allocating a small number of points. An old-style existing LCEA was awarded, held until retirement and consolidated into pension so were of much greater value than the monetary value of a single new style CEA.
Consequently, to receive equivalent value, award committees should consider awarding a far greater number of points (eg 4 or 5 and even up to 9) to high performing consultants and also consider converting the available points into fewer awards with a higher monetary value. Furthermore, it is essential that trusts run awards rounds as soon as possible after the end of the financial year. For example, the 2020 round, should open in April and conclude by June so that successful consultants can take early action to mitigate any potential annual allowance tax implications, if they should need to.
Vishal Sharma is the BMA consultants committee deputy chair
This year it tips me over the cliff edge and receipt of one would cost me much more than the CEA value.
Next year, I think I will be over the 110k limit, so could apply for one - but suspect the taxation rate of the earnings will be so high it may not be worth the effort. 40% income tax; 20% effective tax on loss of tax free pension allowance; 2% NI - am I missing any others?
Have to say I do feel demotivated by the remuneration package at present. Have already quit a HEE role because it was going to cost me 8k in additional tax for a 2k income, and will be looking to shrink my sessions. Like many older folk suspect I will be trying to move away from the acute medicine part of my role to do so, although it is clearly a shortage specialty...
where I work is considering sharing out the increased awards between all eligible consultants and getting rid of EBAC. Should this be happening as I don't believe this is then a clinical excellence award and means the ones who do nothing get a Christmas bonus and those who work hard and are actively involved in research and bringing in big pharma trials for R and I get exactly the same as everyone else. Kind of leaves a person feeling quite demotivated. In fact all this pension business leaves me demotivated to be honest!!
I understand why this is being said, but the link suggested that receiving CEAs wouldn't impact on pension liability when clearly that is not the case - as it increases total pay which can have an impact depending on where you are in the income scale.
If the Government really are going to sort this all out (as promised), then it is not clearly the best option to roll over the awards into a subsequent year where they can be taken without penalty and when applications would be expected to recover?
Again if the pension issue isn't solved until May or June 2020, best for trust to wait until that happens before holding a round is it not?
It is quite hard to understand in advance whether or not an award will impact on annual allowance issues. Do you know for sure you won't get a promotion, have to cover absent colleagues, be asked to take on an essential role, etc? The system is so complex that difficult to be sure what happens to your tax bill and even experts seem uncertain.
My trust looked at giving something to everyone, but even this doesn't work with the current situation, where a pay rise may cost you more than gain.
The priority has to be to resolve the pension issue and LCEA issue is then automatically resolved,