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RCSEd Responds to Government Statement Regarding the Pension Tax Crisis

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25 Nov 2019

The Royal College of Surgeons of Edinburgh has responded to news that the government will ensure that doctors, nurses, AHPs and other clinicians in England who exceed their NHS pension allowance in this financial year will not be left out of pocket.

Professor Michael Griffin OBE, President of the Royal College of Surgeons of Edinburgh said:

We are delighted that the government has taken this overdue step.

This week we have seen the NHS Confederation warn that understaffing threatens patient safety and performance against key waiting times reach their worst record for over a decade.

With an estimated 100,000 clinical vacancies, including around 10,000 doctors, the NHS needs all the resources it can muster.

However, the introduction of a tapered annual allowance mechanism into the NHS Pension Scheme in 2016 has resulted in significant numbers of consultants reducing their working hours to avoid facing unexpected tax bills.

Whilst today’s announcement is welcome, it is overdue. The changes will allow clinicians who have reached their annual pension allowance to pay any tax liabilities from their accumulated pension pot. The NHS will then make a contractually binding commitment to pay them a corresponding amount on retirement, ensuring they are compensated for this deduction.

However, this only applies to the current financial year. This means there are questions over retrospective tax liabilities and how the scheme will operate in England in the future.

The same questions also apply in Scotland. As of 1 December, the Scottish Government will allow doctors who are likely to breach their annual allowance to have their employer pension contributions paid to them as part of their basic pay so that they can pay tax and national insurance on from this payment.

We will therefore monitor both proposals closely. Consultants need the long term assurance that they will not be landed with significant tax liabilities. As the government’s own Office for Tax Simplification have recommended, the next government must scrap the punitive annual allowance in the NHS’s defined benefit scheme.

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