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GPs set to be given greater flexibility over pensions contributions

GPs will be able to choose their own percentage of pension contributions, in a new ‘flexible’ approach replacing the current 50:50 proposal.

The Government has announced proposals to overhaul the current pensions rules for NHS doctors, including greater flexibility on pensions contributions and a review by the Treasury into the tapered annual allowance.

In new proposals outlined by the health secretary and the chancellor, employers will be given the option to 'recycle' their contributions into the overall salary. 

The Department of Health and Social Care will soon publish a consultation with proposals of all the 'wide-ranging' flexibilities to the NHS Pension Scheme, which means from the next financial year, GPs can remain in the scheme without facing huge financial penalties.

Doctors will be allowed to set their own level of pension accrual at the start of each year in multiples of 10, ie 10%, 20% etc. The Government hopes this will mean GPs can set a level to provide enough leeway from them to take on additional work without breaching their annual allowance. Employers have the option to recycle their unused contribution back into a GP’s salary.

However, BMA council chair Dr Chaand Nagpaul said: 'The new proposed flexibilities will provide short-term relief for many doctors, but they themselves do not tackle the core and underlying problem. This lies in tax reform, and as we have said before, it is the overhaul of the annual allowance and tapered annual allowance, that will make a difference to all doctors, including consultants, GPs and medics in the armed forces.'

He added: 'We said clearly when it launched that the earlier consultation on the 50:50 model – whereby doctors and employers halve what they put into their pension pots – was not fit-for-purpose and we are pleased that the Government has heeded the BMA’s concerns by ditching it. This method is overly restrictive and can leave doctors putting either too much or too little into their pensions.'

A BMA poll recently revealed four in 10 GPs have cut their hours over pension tax penalties.

It comes as GPs had been facing personal tax bills of up to £50,000, as reported by a financial planning and investment firm, who said the news had been a result of a surge in GPs seeking pensions advice.

Guidance will be issued to employers on how they can provide staff with the flexibility on a local level for this financial year so they can carry out extra shifts with going over the limits for pensions tax relief.

The BMA has said it is glad its year-long lobbying has led to the Government ‘sitting up’ and taking action.

Dr Nagpaul continued: ‘We acknowledge this step forward by the Government. After a year’s tireless lobbying by the BMA on the damaging and perverse effect that this legislation is having on our NHS, its doctors and patients, it is good to see the Government finally sitting up and taking notice and proposing action.

‘The BMA will be glad to work with the chancellor and the health secretary to guarantee changes that will solve the problem for all doctors.’

The Government has said it hopes the changes will retain doctors, in a bid to fulfil the goals of cutting waiting times as part of the long-term plan.

Health secretary Matt Hancock said: ‘These comprehensive proposals will give doctors the pension flexibilities they have called for and need to make sure they are rewarded for extra work. We are taking immediate action and I hope these flexibilities will encourage our top NHS staff to fulfil the dedication of their mission: to care for their fellow citizens in time of need.’

It comes as younger GPs were being advised to cut their clinical hours to avoid extra pensions charges.

Research previously suggested doctors were having to create DIY 'work-arounds' to avoid huge tax bills.

Readers' comments (17)

  • Majority of GPs are locum now a days, what about them? Only a handful of GPs are affected by above.

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  • What about GPs who have already retired, cut hours or paid penalties because of this punitive pension tax? Do they get a refund or ability to reverse some of their decisions?
    The Governments statements say this is still a consultation. Why has a decision not been taken yet?

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  • Vinci Ho

    When you look at this 50:50 again :
    ‘’Tapering of this annual allowance began on 6 April 2016 and reduces the standard £40,000 annual allowance for pension contributions by £1 for every £2 earned over £150,000, down to a minimum of £10,000 allowance (at £210,000 income).’’

    Because this is one size fits all (again !) , this is not just punitive but like wiping out a ‘tribe’ . As long as your total income that year goes beyond a certain threshold , you are f***ed UNLESS you play the loophole of forming a private company to exploit the advantage of corporation tax rate at around 18-19% but there is certainly ‘restrictions’ to set up a limited company.

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  • Vinci Ho

    And you still have to reduce your practice income earned if you are a partner.

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  • And as a GP you don't know how much your pension liabilities are until 18 months AFTER you earn them.

    And this fudge doesn't take effect until April 2020.

    And GPs who have reduced their hours already will cut their cloth and very happily NOT increase their hour back up.

    I've got my popcorn out looking forward to the Tories crashing and burning as the NHS implodes over the next year or so.

    Excellent.

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  • The problem with this model is that GPs will have to reduce their pension contribution to such a low level to counteract the subsequent increase in overall they will receive by not taking the pension. This means that their pension pot will increase by a minimal amount only- possibly this is the wish of the Government to prevent larger pensions being accrued.

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  • Vinci Ho

    The funny , ironic thing is no matter how much one debates on left versus right wing ideologies on issues of tax , the actual phenomenon is many of us(GPs) are leaving because of this pension fiasco and the whole thing is under a presumably ‘to the right’ Conservative party . LOL 😂

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  • Tax decisions made by very very wealthy people who are largely unaffected by pension planning, but who can indirectly reduce their own tax burden by getting the middle classes to shoulder it....

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  • The principles the governments seems to run on are:
    1)Make it complicated so nobody even those at HMRC knows and you can make it up prn.
    2)Give with the right and take with the left.
    Trust is lost in the NHS pension and tax system. God knows some new rules might come in to raid your pension. I choose to pay the tax, have it now. At least I know how much is there rather than the "pension growth that one can only know after 18 months"and no one can raid my bank unless they do quantitative easing again. It does not pay to work. Have a beer it is far more enjoyable and easily understandable. I am happy to pay the VAT. At least I know how much it is.

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  • This is only going to slightly improve the situation.
    It will not stop me from cutting my hours.
    If the government is serious ,they will remove the annual allowance and raise the LTA for public sector workers.

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  • gps should have same pension system as mps senior plod etc

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  • The country is broke. The Pensions are a Ponzi scheme. Pension contributions don't sit in a pot waiting for you to retire. They are used--partly to payout those receiving a pension. When we get there there will be nothing left.

    Get out of the Pension scheme and put the money into Bitcoin or Gold

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  • Anyone under the age of 45 paying into the nhs pension Ponzi scheme is essentially paying for the cruises of the retired consultants and Gp partners who received pensions superior to the ones those who are currently paying in will get. People should realise this and stop subsidising other people’s lifestyles. There’s plenty of intelligent things one can do with their money than give it to the government.

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  • already given up hope NI GP

    The problem is that GPs contribute to a whole of lifetime earnings scheme through Deferred Earnings This not a true pension scheme If we are deferring earnings then we shouldn’t be subject to Ann allowances or LTA When we take our pension we will be subjected to TAX like everyone else and yes that may mean taxing any lump sum provided by the scheme but this would be a much fairer way to proceed

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  • not enough to stop me leaving early. won't work cause still issue of too much tax, loss of personal allowance contributions and affects any benefits you may be allowed to have. capita still not sorted out lost pension contributions for last 10 years and why would you want to work in the NHS anyway. this is about extra sessions as overtime due to lack of staff - they are under no obligation to do the work. why not sort out the underlying issues - poor pay, poor working conditions, excessive workload and the NHS bullying culture first and you wouldn't need the overtime in the first place.

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  • GPs have career average revalued earnings pensions and the rate of CPI applied each year affects the increase in capital value of the total pension pot and therefore the annual allowance charge. I see nothing in these proposals that addresses this.

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  • I thought our (frozen) 1995 'pot' rose by RPI+1.5% rather than CPI.

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