Scrap tapered Annual Allowance to address NHS pensions crisis, says NHS Confederation

Niall Dickson

The Chancellor Sajid Javid should act now to address the NHS pensions crisis by scrapping the tapered Annual Allowance, according to the NHS Confederation.
 
Last week the government launched a public consultation on changes to the NHS Pension scheme but the NHS Confederation, says these proposals do not go far enough and will not solve the problem on their own.  
 
The current crisis stems from the introduction of the tapered Annual Allowance and the further lowering of the standard Annual Allowance to £40,000, which in effect has penalised senior doctors and other NHS staff for continuing to pay into their pension.
 
The Annual Allowance places a limit on the increase to the value of your pension benefits you can build up each year. If an individual exceeds this limit, they will be faced with an annual allowance tax charge.
 
As a result many doctors and other senior clinical NHS staff are now turning down additional work and asking to reduce their working hours which is already affecting patient care.
 
Research commissioned by NHS Employers, part of the NHS Confederation, found 42% of those questioned, predominantly consultants, had reduced the number of extra shifts they do.
 
Government proposals for changes to the NHS Pension Scheme include doctors paying only half the usual amount of pensions contributions to reduce the rate of growth in the value of their pension savings, that triggers the larger than expected tax bills.
 
Niall Dickson, NHS Confederation chief executive, said: “Problems for patients will intensify without government reform of the annual allowance taper and the introduction of new flexibilities into the current NHS pension scheme arrangements.
 
“The current proposals, are not enough to tackle the problem - what we need is a more wide-ranging set of reforms which do not seek to penalise hard working professionals many of whom have devoted their careers to public service in the NHS, providing essential services and care to patients.
 
“This is a government created mess and it is past the time when ministers should have cleared it up. 
 
“Operations are already being delayed and cancelled. We are seeing doctors and other senior staff reducing their hours and, in some cases, leave the NHS, all doubtless because someone failed to think through the full consequences and effects of these changes to taxation policy.

“There is both anger and dismay across the NHS and it is time to act, to prevent any worsening of this position as we move into autumn and winter. 

“In addition to the changes to the tapered annual allowance, we do need new flexibilities to NHS Pension scheme arrangements - for all NHS staff. 

“Should such changes to taxation policy and pension scheme flexibilities be introduced, we accept that the Treasury will want to look at ways to fund these changes from higher earners who are benefiting from pension tax relief.”


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