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Govt proposes NHS pensions shake up to defuse crisis

High earning doctors should be able to reduce their pension contributions to avoid being penalised by the tapered annual allowance, the government says.

A consultation published by the Department of Health and Social Care suggests a ‘50/50’ proposal where members could reduce the amount of pension they build up alongside the amount paid.

Health professionals in the NHS have complained about being hit by higher allowance charges and the British Medical Association has written to the government repeatedly about the issue.

In May former pensions minister Steve Webb called for the Treasury to abolish the tapered annual allowance as quickly as possible to tackle the NHS pensions crisis.

Subsequently chancellor Philip Hammond ruled out scrapping the tapered annual allowance and argued it is “necessary to deliver a fair system and protect the public finances.”

This consultation arises out of this context and aims to put the controversy over NHS pensions to rest.

Responding to the consultation Aegon pensions director Steven Cameron says: “It’s important to resolve this issue so medical professionals don’t feel constrained from taking on extra work.

“The government is consulting on allowing individuals to choose in advance to take only a proportion of their pension entitlement or to wait till the end of the year before deciding how much additional pension to ‘buy’, both designed to avoid suffering a tax penalty.

“While well-intentioned, expecting medical professionals to make informed choices here is layering further complex decisions on top of an already complex set of pensions tax rules.

“Medical professionals are accustomed to referring complex medical issues to specialists, and here, there is a very strong case for obtaining financial advice from a pensions professional.”

Quilter head of retirement Jon Greer described the 50/50 rule as a “sticking plaster” which does not properly diagnose the root of the pension problem.


A female Caucasian doctor and a young girl of African descent are indoors in a hospital room. The girl has cancer. She is being comforted by her doctor while being hooked up to an IV.

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There are 4 comments at the moment, we would love to hear your opinion too.

  1. 50/50 may help, as will being able to chose after the end of the year.

    However the root cause of the problem and the uncertainty is the cliff edge of threshold income coupled with the final salary link to the old scheme being active even when active membership ceases.

    Currently anyone working for the NHS can only ensure they do not get hit for an AA tax charge one way. Which is by leaving the NHS.

    Which clearly is not desirable for medical staff.

  2. Dominic Thomas 23rd July 2019 at 1:25 pm

    This is not a “shake up” its a cop out. 50:50 is, to simplify nothing more than taking half of the current entitlement. It does nothing to alter the counter-intuitive policy of penalising saving for retirement and working hard to earn more money (which has income tax applied). Neither does it address the accrual rate/value of any State backed DB scheme. This is a sham from a shambles of a Government.

    • The whole situation needs to be addressed. I am not in favour of special rules for anyone, however. This government are, as you say, a complete and utter shambles that have just elected Tommy Cooper as the PM for the whole country.

      And I thought the US electorate were crazy.

  3. I would also observe that these additional options, do not solve the problems, they simply make them more complicated, because then you would have to work out which one of now 3 options is best for you and that cannot be worked out till November after the end of the tax year in question, because it takes that long to get an annual allowance usage statement out of NHS pensions.

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