On the go: Matt Hancock, the secretary of state for health and social care, is in discussions with the chancellor over the issue of pensions tax relief and the impact it has on GP retention.
In an interview with trade magazine Pulse, Hancock said he has been talking to chancellor Philip Hammond about considering changes to the tax treatment of pensions.
In April 2016, the government dropped the lifetime allowance for pensions tax relief to £1m from £1.25m. As a result, many retire early once they have reached their tax relief limit, to avoid being subject to tax penalties.
Responding, a spokesperson for HM Treasury said: “We want people to save into a pension, which is why we allow the majority of savers to make contributions tax-free. But we do have to get the balance right between encouraging saving and managing government finances, which is why we restrict tax relief available for the highest earners."
A treasury source then poured further cold water on the prospect of weakening government finances to provide more money for GPs.
“The Secretary of State for Health has just inherited the biggest single cash injection the health service has ever had. He can now put that money to work supporting NHS staff and frontline services,” they said.
Tom McPhail, head of policy at Hargreaves Lansdown, said: “It is hardly surprising that doctors are choosing to retire early, once they have maxed out on their pension accrual. The incentives to continue in work start to diminish once you know any further pension increases will be subject to punitive tax charges.”
However, he argued that the answer does not lie in putting in place some sort of special exemption for GPs.
“The whole pension tax system needs an overhaul, to the benefit of all workers, not just GPs. The lifetime allowance limit of £1,030,000 is causing particular issues and serves no meaningful purpose now that the annual allowance has been brought down to £40,000. It penalises savers whose investments perform well, and should be abolished,” he said.
