This site is intended for health professionals only

At the heart of general practice since 1960

pul jul aug2020 cover 80x101px
Read the latest issue online

Independents' Day

Hancock in discussions with Treasury about changing GP pension tax rules

Exclusive The health secretary is in discussions over changing the tax treatment of pensions due to the effect on GP retention, he told Pulse in an exclusive interview yesterday.

In his first trade press interview since the publication of the long-term plan, he said that the tax charges on pensions is ‘the biggest concern I have raised with me’ by GPs.

The lifetime allowance for pensions tax relief was brought down from £1.25m to £1m in 2016, meaning for many GPs there is little benefit in continuing to pay into their pension fund – removing one of the main incentives to wait until retirement age.

Mr Hancock added he is currently in discussions with the Chancellor over the issue.

In a wide ranging interview, Mr Hancock admitted that the Government will not meet the target on recruiting the 5,000 new GPs by 2020, and said they weren’t implementing a new deadline, and that he believes there needs to be a ‘level playing field’ between Babylon and standard practices.

Mr Hancock’s exclusive interview with Pulse followed the publication of the NHS long-term plan this week.

The plan earmarked £4.5bn for primary and community care, and it was announced that the new GP contract will mandate practices to join networks.

However, there was little detail about workforce, with a further plan to be launched later in the year.

Speaking about retention, he told Pulse: ‘The biggest concern I have raised with me is around the tax treatment of pensions. 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.’

When asked whether this would affect just GPs’ pensions or all pensions, Mr Hancock replied: ‘I’m not going to go into the details of the conversation because we’re not ready to publish anything on it. I know how important it is and I’ve being having discussions with colleagues about it.’

In response to Mr Hancock’s comments, Dr Richard Vautrey, BMA GP committee chair, said the BMA has ’persistently lobbied the Government’ on pensions, and said they ’welcome any signal from the Secretary of State hinting at reform’.

He added: ’Hard-working GPs – and doctors of all kinds - have been unfairly hit in recent years by complex regulations and tax changes impacting their pensions, meaning many are inadvertently facing huge bills at the end of the year.

’At a time of plummeting morale across the profession, and amid a deepening recruitment and retention crisis – particularly in general practice – such charges make taking on extra work, or even continuing to work full-time, an extremely unattractive prospect. A growing number of doctors, and not just older medics with years of experience under their belts, are effectively being penalised for working hard.

’We will continue to press on this, and be watching carefully how Mr Hancock’s words turn into actions.’

Deborah Wood, vice chairman of the Association of Independent Specialist Medical Accountants and healthcare services partner at MHA Moore and Smalley, said: ’It is pleasing to hear that Matt Hancock is fully aware of the impact of the pension tax charges on GPs and consultants and that he has taken up a discussion about this with the Chancellor

’As specialist healthcare accountants we find that many of our clients are having to make decisions about reducing working commitments or retiring early because the marginal effect of tax rates, particularly around the annual allowance tax charges, means they are seeing little net financial reward for working additional sessions.

’When recruitment and retention within the profession is crucial and there are highly experienced doctors willing and able to perform their services it cannot make sense for the tax issues to continue to drive them to these decisions. We, along with our fellow AISMA members, would welcome a review by the Treasury to alleviate some of these issues at the earliest opportunity.’

Professor Helen Stokes-Lampard, chair of the RCGP, said: ’We are desperately short of GPs across the country and we need to explore all possible options to both recruit more GPs to the profession, but also to retain our existing, hard-working and experienced workforce.

’There is some great work ongoing to increase recruitment into general practice, and we now have more GPs in training than ever before - but when more family doctors are leaving the profession than entering it we are fighting a losing battle.’

She added: ’Measures to keep GPs in the workforce longer, including taking steps to reduce workload to make working in general practice more sustainable and removing incentives to retire early for GPs who might not necessarily want to, would both be sensible places to start.’


Readers' comments (30)

  • I agree with Alan Almond that workload is the biggest issue.
    Most doctors would or should be happier to work in clinically safe roles where demand is not controlled where we can not recruit colleagues etc
    I hope we all went into medicine to treat patients but we have not looked after ourselves in terms of workload and stress levels
    GPa have been forced to become managers as well as their overstretched clinical work
    However, the pension and tax issues ignore market forces
    The NHS needs to pay and treat experienced clinicians well or they will opt for a safer life such as retirement

    Unsuitable or offensive? Report this comment

  • AlanAlmond

    ..if you are salaried you can negotiate an increase in salary in proportion to your now absent pension contribution and use that to invest as you like. If your a partner I guess you could do something similar or put the money saved somewhere else. The NHS pension is not compulsory, I wonder if the pension limit issue doesn’t display a certain absence of creative thinking. You can still,work and earn, just don’t pay into the pension...or am I missing something? I don’t really get the “it’s not worth me working” argument, Apologies if I’ve missed some tax implication of which I am not aware, couldn’t you use the freed up cash to pay down a BTL mortgage, stick it in an isa or something else? If you’ve got a million in your pension already, your retirement isn’t going to be threadbare.

    Unsuitable or offensive? Report this comment

  • Look at 1971 'Optimal Tax' models (Nobel Prize work by James Mirrlees). The 62% marginal rate is so far beyond what is damaging to work that the chancellor won't fix it with a small tax allowance concession.

    Unsuitable or offensive? Report this comment

  • The prematurely retired GPs I know left because of workload, revalidation and micromanagement; but as the RCGP are in large part responsible it is no suprise they did not tell Mr Hancock this.

    Unsuitable or offensive? Report this comment

  • The country is bust. Pesnions are a Ponzi scheme. There is no pot of money put away for pesnions--the money comes from taxing the younger work force. In the good old days GPs retired at 60 and enjoyed a great pension for a few years and then died. They worked all hours, drank enthusiatically, declined exercise and smoked heroically.

    The modern GP retires at 55, doesn't smoke. Drinks a bit, probably does a bit of sport and refuses to smoke. Probably lives until at leat 80.The pension is no longer affordable. That is why Osborne started tinkering with the pension rules.

    If you are over 55 take it now. Next plan is to make you pay tax on the lump sum!Get your hands on it while you can!

    Unsuitable or offensive? Report this comment

  • Took Early Retirement

    True AA, but remember the cap applies to anyone's pension pot; not just the NHS. Perhaps better to put the money into ISAs and property as and when one can?

    Unsuitable or offensive? Report this comment

  • Taxing the lump sum would be retrospective taxation which would be the equivalent of financial armageddon. It would totally destroy trust and in turn destroy not just the NHS Pension scheme but all pension schemes.
    What might be possible is taxing any accrued lump sum going forward but any lump sum equivalent already achieved is safe. If it's not then the lumo sum is the last thing you are going to be worrying about as you head for the hills with your loaded rifle.

    Unsuitable or offensive? Report this comment

  • Spot on Merlin re observations of the older and current GP retirements.
    But I've never understood 'take your pension at 55' - with 25% actuarial reduction it will be tiny - how does that work?

    Unsuitable or offensive? Report this comment

  • Any chance of sorting out Crapita so they do not piss you about for months after the pension should have been paid, and when they do finally pay up they ignore two years of your contributions?

    Unsuitable or offensive? Report this comment

  • doctordog.

    Workload, indemnity appraisals and revalidation could all be tolerated if the remuneration reflected this.
    Reaching the pension threshold meant increased tax liability on the extra earnings received by not contributing to pension allowing a session reduction.
    Working the extra day now would earn about £11, just not worth it.
    The lowered pension threshold is entirely the cause of this situation.

    Unsuitable or offensive? Report this comment

View results 10 results per page20 results per page50 results per page

Have your say