Last updated:

Raising threshold income will not solve NHS pensions crisis says BMA

Responding to reports in The Times that the Government is considering increasing the threshold income at which the tapered annual allowance applies to individuals from £110,000 to £150,000, Dr Vishal Sharma, BMA pensions committee chair, said:

“In its election manifesto, the Government pledged to ‘address the taper problem’, but this proposal would do no such thing. It does not fix the fundamental problem of doctors being forced to limit the work they do to prevent being hit with significant charges on their pensions and many will still in effect be paying to go to work.

“As the BMA has said from the outset, the annual allowance is completely unsuitable for defined benefit schemes. Simply, raising the threshold income would not remove any of the complexity of the taper, nor the threat of doctors facing a ‘tax cliff’ when their income increases through promotion or taking on additional work. Indeed, unless there is also an increase in the level of adjusted income, this proposal would only make this ‘tax cliff’ steeper. 

“This view is also backed by the Institute of Fiscal Studies, which also says moving the threshold will not remove the problem – and, like the BMA, is calling for fundamental tax reform.

“Furthermore, such a change would punish the brightest and best doctors most severely, meaning talented clinicians would likely give up or avoid seeking leadership or educational roles within the NHS. It would be deplorable to deprive the health service and its patients of innovation and talent in such a way.

“And due to the complexity of the way pension growth is calculated, with a final figure only known at the end of the tax year, even those who earn well below this increased threshold would still likely limit their work to ensure they’re not hit with unexpected charges.

“We’ve had a year of inaction with flexibilities and consultations. Doctors and our patients desperately need an immediate solution that is simple and solves the problem completely; the NHS cannot cope with further half-measures.

“The BMA firmly believes that scrapping the annual allowance and tapered annual allowance in defined benefit schemes – as suggested by the Government's own advisers, the Office of Tax Simplification – is the only viable solution. This will not only get doctors back to work caring for patients, but it is also a more cost-effective option for the Government than raising the threshold income. It will enable all doctors to do as much work as is needed without fear of punitive tax bills and save the NHS significant sums by reducing costs spent on locums and outsourcing to the private sector.

"It is not a case of the BMA pushing for 'further concessions' – but working with Government to achieve a solution that works for both for the NHS and the taxpayer, one that we have articulated clearly.

“Crucially, without scrapping the annual allowance in defined benefit schemes, the NHS will continue to haemorrhage doctors at a time when it can least afford to.”

Ends

Notes to editors

The BMA is a 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.

1. Find more information about the BMA’s work on pensions here.

 

For further information please contact:

British Medical Association, BMA House, Tavistock Square, London, WC1H 9JP
Telephone: 020 7383 6448 
Email: [email protected]
Media centre | Twitter | Youtube - BMA TV | Flickr