On the go: The government is to review the operation of the tapered annual allowance for senior clinicians, following a vigorous campaign by NHS doctors.
Around a third of NHS consultants and GP practice partners have earnings from the NHS that could potentially lead to them being affected by the tapered annual allowance.
The new consultation announced today will also propose full flexibility over the amount senior NHS clinicians put in their pension pots. The new plan replaces the 50:50 proposal put forward for consultation in July.
Starting from the next financial year, the new rules would allow senior clinicians to set the exact level of pension accrual at the start of each year.
For example, 30 per cent contributions for a 30 per cent accrual rate, or any other percentage in 10 per cent increments depending on their financial situation. This would give them room to take on additional work without breaching their annual allowance and facing tax charges.
Employers would then have the option to recycle their unused contribution back into the clinician’s salary.
Chancellor of the Exchequer, Sajid Javid, said: “This government is committed to ensuring that British people see a real difference in public services, including getting quicker GP appointments and a reduction in waiting times.”
He added: “Critical to that is introducing flexibility into the system so that our hospitals have the staff they need to deliver high-quality patient care, which is why we’ve listened to concerns and will be reviewing the operation of the tapered annual allowance.”
But Dr Nicholas Grundy, chair of GP Survival, pointed to problems with the proposals: “They are limiting the option to ‘senior clinicians’ – it should be offered to all NHS employees, managers included. They are important too, and although they're not cutting shifts in the way doctors are, it disincentivises them to do additional work.”
He added that employers “must also be obliged to 'recycle' contributions into employees’ salary and the government must commit itself to 'recycling' the entire contribution back to the employee”.
Sir Steve Webb, director of policy at Royal London, said the proposal of a review of the tapered annual allowance is long overdue.
He highlighted that the problem is not unique to the NHS or the public sector. “Any review must be comprehensive and cover everyone affected by this absurdly complex taper, including in the private sector. The best solution by far would be outright abolition, even if this meant a slightly lower annual allowance across the board.”
The proposed changes will also create a huge need for high-quality financial advice. Mr Webb said: “Doctors will now face an annual choice of contribution rates between 0 per cent and 100 per cent and may have to review their decision late in the financial year. Decisions to give up valuable pension rights should not be taken lightly or hurriedly and there is a risk that new options will be available before the necessary advice infrastructure is in place.”
