On the go: Senior NHS doctors will cut their working hours unless there is tangible reform to the health service pension scheme, the British Medical Association warned the Chancellor of the Exchequer on Thursday.
In a letter to Phillip Hammond, the BMA said current pension and tax rules are forcing senior NHS consultants to cut their hours, retire early or turn to private practice to avoid large tax charges.
Since 2016, workers with a taxable income over £150,000 have had their annual allowance for that tax year restricted. For every £2 of income they have above £150,000, their annual allowance is reduced by £1. This tapered allowance is not applicable to people with threshold incomes no more than £110,000.
Currently, employees can save up to £40,000 a year and £1.055m in their lifetime before incurring income tax on pensions contributions. But senior doctors and other high earners see their annual allowance cut further, to as low as £10,000.
“Unless action is taken, our only option is to reduce the amount of time we work for the NHS, which will, through no fault of our own, be detrimental to our patients and to the country’s health service,” said Dr Rob Harwood, chair of the BMA consultant committee.
Unless NHS employees opt out of their scheme, working additional shifts could work against them, incurring large tax bills. According to the BMA, the UK’s largest union for doctors, the current rules are creating a “perfect storm” undermining the quality of the NHS.
“Doctors are facing the very real prospect of effectively working for no pay and that is untenable,” Dr Harwood added.
Health department and treasury in discussions
Matt Hancock, secretary of state for health and social care, responded with sympathetic words: “We do need to ensure we retain the brilliant staff we have in the NHS.”
“I accept the analysis behind this critique. This is an unintended consequence of a different tax change made a couple of years ago and it is something I am talking to the Treasury about,” he said in a BBC interview on Thursday.
But Phillip Hammond did not respond to the BMA’s request for a meeting, despite BMA members sending over 1,600 letters to MPs calling for NHS pensions reform.
Industry insiders expressed solidarity with the BMA’s letter. Ian Browne, pensions expert at Quilter, said: “For those that are maximising their allowances, they can be penalised with harsh tax penalties and may end up in a worse financial position as a result. That is a perverse disincentive to save for the future.”
“When a complex area of savings taxation is impacting on vital front line services, something has gone badly wrong,” Mr Browne added.
This story has been updated for clarification.
