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The proposed changes to the NHS Pension Scheme are a temporary ‘sticking plaster’ solution that won’t fix the pension tax crisis, the BMA has said in its official response to Government proposals.
A Department of Health and Social Care consultation on greater pension flexibility is a ‘much-needed’ but temporary solution if there is no fundamental tax reform, the union said.
The Government admitted last month that the lack of flexibility in the current NHS pension system is giving GPs an incentive to cut their hours or refuse to take on extra shifts in order to avoid pension tax charges.
A survey from the BMA in August found that thousands of GPs and hospital consultants have cut their working hours, with thousands more planning to do so. This has had a ‘catastrophic’ impact on patients and the NHS, it said.
Options to tailor pension accrual
Launched in September, the DHSC consultation proposes that NHS pensions scheme members be given the option to tailor their pension accrual to the level they want with the flexibility of raising or lowering their accrual level late in the scheme year.
In it’s response to the consultation, the BMA said: ‘The BMA does not consider it possible for the perverse implications of pensions taxation legislation to be resolved within a pension scheme. Therefore, any flexibilities introduced after this consultation – even if they are the most appropriate and creative flexibilities possible – will provide little more than a sticking plaster to cover the issue.’
The BMA response said the issue can only be addressed if the annual and tapered annual allowance is scrapped.
The response said: ‘The tapered annual allowance must be removed immediately. We believe that there must be a fairer, more transparent way to raise revenue from pensions taxation and we have consistently said that we would be happy to be a part of that conversation. In addition, we believe that annual allowance is fundamentally unsuited to defined benefit schemes where growth cannot be easily controlled.’
BMA pensions committee chair, Dr Paul Youngs, said: ‘These perverse rules have for too long meant that doctors are being forced to turn down vital extra shifts caring for patients in our under-pressure hospitals and GP surgeries because they would be literally paying to go to work.
‘While the proposals in this consultation from the DHSC offer short-term mitigations, they are merely a sticking plaster that fail to address the crux of the problem. Only by scrapping the damaging Annual and Tapered Annual Allowance will the government stem the flow of doctors refusing additional work or considering leaving the profession over the issue. This lies with the Treasury.’
‘We urge the Government to get a grip on this issue immediately. As we approach Brexit day and the onset of winter – themselves presenting their own threats to the NHS and its patients – we cannot afford to be without the skills and expertise of our most experienced doctors.’
He added: ‘Furthermore, any flexibilities without insisting that employers fully recycle their contributions back to the employee is worthless.’