Progress on pensions tax

by Anne Carson

Following news that, in response to the concerns raised by BMA Northern Ireland, the Department of Health has agreed to develop a pension-contribution recycling scheme, Anne Carson gives us more information on why this is needed

Location: Northern Ireland
Published: Monday 28 November 2022
anne carson

The health service in Northern Ireland is continuing to haemorrhage highly qualified doctors at a time when we need to keep them the most.

And when I speak to colleagues about why they are thinking of cutting their hours, retiring early or leaving to work elsewhere – alongside feeling overworked and undervalued – one single issue comes up time and again. Pensions.

We’re often told that the Health and Social Care pension scheme is generous, and a benefit which rewards our dedicated and hardworking healthcare staff.

This might be true for many scheme members but for a considerable and increasing number of senior doctors this just simply isn’t the case, and the main reason is punitive pension taxation.

At its worst, and with high inflation levels, pension tax could lead to some doctors paying charges of tens of thousands of pounds, in some cases up to half of their post-tax income.

It’s becoming the norm for colleagues to see pension tax bills of several thousand pounds every year owing to breaching arbitrary annual allowance limits.

While pension taxation itself is not devolved (and we continue to lobby the UK Government for changes to the tax regime), the Department of Health and HSC employers in Northern Ireland can and should take urgent local action to mitigate the effect this issue has not only on staff morale, but their ability to treat more patients.

This is why we are pleased the Department of Health has listened to our calls to introduce a pension contribution recycling scheme.

While not a perfect solution, it will enable doctors affected by pension taxation who need to opt out of the pension scheme to be offered a separate payment in lieu of their employer pension contributions.

At present many colleagues forced out of the pension scheme owing to pension tax have to forgo this significant part of their pay completely.

It’s long been our view no doctor should have to give up part of their reward package owing to unfair taxation.

This isn’t right morally, and it does nothing to help retain the staff we need to address the huge care backlogs and unacceptable waiting times across the region.

We expect to see more specific details of the policy as it’s developed and will use every opportunity to feed in the views of members across Northern Ireland to ensure the scheme is fit for purpose and is effective in retaining our senior medical workforce.

The Department has indicated it hopes to introduce a recycling policy from next year. It’s vital  this happens as quickly as possible so even more doctors aren’t forced out the health service while we wait.

Anne Carson is a consultant radiologist and a member of the Northern Ireland consultants committee