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Calls to change lifetime allowance for doctors ‘will fall on deaf ears’

3D illustration of Ribs - Part of Human Skeleton.Quilter has hit out at the possibility of changing the pension rules for doctors, saying the Treasury will not support separate provisions for different professions.

In response to discussions between health secretary Matt Hancock and the Treasury last week around a potential exemption to standard lifetime allowance rules, Quilter pensions expert Ian Browne says arguments for changing the pension tax rules are likely to fall flat.

Medical magazine Pulse reported on Friday that Hancock had broached the topic of altering rules for general practitioners with the argument that restrictions are negatively impacting recruitment for the wider sector.

The £250,000 cut to pensions tax relief compared with three years ago means there is limited benefits to be had for GPs paying into their pension funds, Hancock reportedly argued.

Leaving the profession earlier than the expected retirement age has led to a sizeable increase in opt outs.

Calling for change will “fall on deaf ears”, however, according to Browne, who says acting on the specific needs of one profession will set a “dangerous precedent.”

Treasury tipped to cut pension tax relief to fund NHS spending

He says: “If the treasury decided they would change lifetime allowance rules for all going forward then you are still left with a group of people who have suffered with the consequence of these rules for a period of time and will likely want recompense. Funding that would hit government coffers hard.

“Triage is an essential part of how a hospital works and with Brexit right around the corner government will be using a similar strategy to decide what policy changes have to be done right away. So even if they did want to make sweeping changes to the lifetime allowance they will be unable to get anything thorough parliament meaning no changes to primary legislation will be on the cards any time soon.”

Seeking financial advice to map out alternative ways of funding pensions in the space is a better solution, Browne adds.

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The discussions between Hancock and the Treasury follow its announcement of a £4.5bn sum earmarked for primary and community care as part of the NHS’s long-term plan last week.

Under this, the new GP contract will mandate that practices join networks.

Hancock says: “‘Of course tax is a matter for Treasury, but I’ve had conversations with the Chancellor about looking at the details of tax treatment of pensions because I understand the impact that that has.

“Hard-working GPs – and doctors of all kinds – have been unfairly hit in recent years by complex regulations and tax changes impacting their pensions.”




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There are 21 comments at the moment, we would love to hear your opinion too.

  1. why should down Doctors be treated any different to rest of the UK If they want to change the rules why not get rid of the LTA altogether

  2. Judges are already (and have been for years) a special case. Mainly because there is a shortage of judges. There is evidently a severe shortage of doctors and it would seem that the government is doing much to attract more doctors. Isn’t rather foolish not listen carefully to their case?

  3. Maybe Hancock needs to think about other reasons the NHS is failing to recruit, not only hard working doctors, but hard working nurses and midwives as well.

    Stopping free movement certainly won’t improve matters.

    • … so totally uncontrolled migration is the answer? Really? Ask those Eastern European countries, who have seen up to 50% of their young people leave, what their future looks like both socially and economically!

      • Nice to know you are more worried about Eastern Europe than the health of the UK population. That’s very open minded of you.

        You might like to know that Polish people, for example, have been returning to their home country in some numbers, over the last year.

        You might also like to know that, while immigration from EU countries has gone down, it has surged from countries outside the EU. Something many brexiters never thought of.

        The staff shortages in the NHS are severe. Many thousands short of nurses and midwives, let alone doctors. It is a very stressful and unpleasant place to work nowadays. Especially since they had not had a real pay increase in around 9 years.

        Stop worrying about Eastern Europe (which will receover over time) when patients are dying, now, in the UK, due to the way the government is running down our National Health Service.

        Having said all that you cannot start singling out more occupations for special treatment. They should do something about the Lifetime Allowance for everyone.

  4. Easy – scrap the penal LTA as no longer needed now we have had serious contribution restrictions for some time.

  5. “Hard-working GPs – and doctors of all kinds – have been unfairly hit in recent years by complex regulations and tax changes impacting their pensions.”

    It’s not just GPs that have been hit hard by this ridiculous and unfair tax, what about those in the private sector who have worked incredibly hard to build meaningful pension provision, we’ve been hammered too!

    Scrap it for everyone – according to my accountant (who specialises in doctors) most GPs earn in excess of £150k and are thus affected by tapering of the AA anyway.

    Makes for an eye-watering read.
    They did try to change the scheme, but were met with large protests, so it’s pretty understandable why they’re unlikely to remove the LTA, as they’ll see it as a form of ‘Cash Back’ from an astronomical liability that let’s face it, isn’t sustainable.
    Assuming they are only Members of the NHS Pension Scheme, then they’d need a an annual pension of at least £44,782 (+3/80ths Lump Sum at £134,347) to stand a chance of being subject to an LTA tax charge.

  7. Whilst I agree the LTA and AA together (together with the Taper) are ridiculous as a cap and collar on funding (one or the other, and preferably no cap on growth surely) why are doctors a special case?

    Everyone else funds their pay, increased by over double since 2004 and their pensions. Should we tax my mother more heavily, who is a basic rate taxpayer of 86, to ensure a pretty well paid Higher Rate or Additional Rate Taxpayer remains a Higher Rate Taxpayer in retirement. This argument may have held water in the past when medical professionals such as GPs were more poorly paid (compare this to other NHS staff). Today, working part time as a GP still produces a pretty good living hence the numbers who do just that increasing (which of course is one of the reasons for the shortage).

    Personally I cannot see why we fund government DB pensions in excess of £40kpa. That together with the state pension produces £50k pa which is surely enough state help provided to live on.

    If you receive up to £150k pa then perhaps you could save more of the money you are being paid to retire at a higher level of income rather than expect us to do it for you, come and join the rest of us poor mortals.

    • 100% in agreement there Paul, limiting government GB pensions to £40,000 would significantly reduce the cost to the public purse and perhaps ensure that the very many less well-paid workers see no further erosion of their much smaller pension entitlements. The much higher earners could even see their pension contributions reduce!

    • Yep, happy with that Paul!

  8. Considering all Doctors are already members of the NHS defined Benefit pension, which is already massively favourably treated for the purposes of both the LTA and AA and they can achieve a guaranteed index linked pension of up to £51,500pa without ever going over the current standard LTA.

    Then taking into account that a private sector worker would need a fund value of circa £2.5m to secure a similar guaranteed pension, I would argue the case that there is a very significant case for changing the very favourable rules around DB pensions and bringing them more into line with DC, i.e effectively penalising Doctors.

    There is sure as heck no case for providing those who already earn vast salaries and vast pensions courtesy of the taxpayer even more.

    • 1. Some doctors work for the NHS and also have a private practice – so that can contribute to a Personal Pension as well.
      2. For those in the NHS – why not allow them to contribute to a private pension in addition with no cap and just cap the NHS scheme to (say) £40k at no earlier than 65.

  9. I have dealt with the senior staff at the NHS for many years, so forgive me for not having any sympathy for these people when they complain that they have to pay an LTA charge on their £2m NHS pension pots. The average private sector employees can only dream of a fund that large and I assume would be happy to pay the tax. I think Hancock has a damn nerve lobbying the treasury for special treatment. Why don’t they just increase the accrual for the pre 2008 members from 80th to 120th, that will solve the problem, or alternatively cap their NHS pension and lump sums, as the other pension benefits that they have accrued with their private practice earnings should cover the shortfall !!

  10. PS I am not a medical doctor before anyone comments

  11. Many NHS doctors work part time – literally a few days/hours a week and spend the rest of there time doing more lucrative work such as injecting botox at several hundred pounds an hour at private clinics and beauty salons. I hardly think they are most in need of help when it comes to retirement income. How about closing loopholes on statutory pension schemes such as MPs and judge’s pension schemes and using that to improve their working conditions and patient care instead…

  12. The whole pensions legislation is a complete “bugger’s muddle” created by incompetent short sighted money brabbing politicians & civil servants. The law and rules should be the same for all without exception and the lifetime allowance should be scrapped. Those who created the current rules have created the problem so why should only some people then be exempt, especially MP’s & judges etc?

  13. Judges. I believe, are no longer excepted

    • I don’t think you are right. But things might have changed (although I haven’t noticed) since I practiced. I had 3 judges as clients – one in the Supreme Court.

  14. Perhaps they need to bring in an ear, nose and throat specialist.

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