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GPs buried under trusts' workload dump

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)

  • The health secretary has just admitted that penal rates of tax are a disincentive to work and a detriment to society.

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  • The pension rules are completely perverse- I've dropped a session after the accountants pointed out an effective 84% marginal tax rate once the charge for exceeding the £40k annual allowance is taken into account. Hourly rate less than our newly qualified nurse? No thanks- I value my time and sanity.

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  • Merlin is right that the NHS Pension scheme is unfunded - meaning its effectively a Ponzi scheme, which is why they've stopped people taking a cash-equivalent lump sum out and transferring that to (for instance) a SIPP.
    But here's the rub: guess who's got a properly funded pension scheme. The MPs!
    Quelle surprise!!

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  • (*Cash Equivalent Transfer Value, as distinct from the Lump Sum at 55)

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  • The 14% employer part of the pension contributions is paid into the practice for forwarding on to the pensions fund. If you stop paying into a pension for any reason, that 14% can become part of your income, and you also gain by not having to pay the employees contribution. It is all your money. There is BAM guidance on the matter. Some practices would argue the 14% should go to the practice as employer, but that is not so if you read the original comments by the BAM at the time of negotiation.
    Employed GP,s on the other hand would lose out on the 14%if they stopped contributions

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  • Could you link to the BMA guidance on that area please anonymous ex GP?

    thanks

    ................

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  • Dr Zaidberg,
    Alas, it was 7 tears ago I took 24 hr retirement and returned to work. I took the 14% as well as my usual share. Unfortunately I can't now find the guidance. But it was certainly part of the negotiations that gave the GP,s the flexibility to use that 14% as they wished depending on their personal circumstances

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  • already given up hope NI GP

    alanalmond we are all concerned re indemnity/workload ect but pensions are important.One of the reasons to take on this public service job was the good pension that came with it.Be careful what you wish for the government would love all docs to scrap their NHS pensions. my guess is that you are a 2008/15 scheme member realising that you will be working till they drop before you get anywhere near a pension payout.If you think a "private scheme" is better then good luck with that.It will be interesting to see what you will be living on come 67/68
    My point is dont knock the older GPs they may want to work but the pension rules make it impossible and its not what they signed up to in the first place.possibly if we had all stayed together when the pension issues arose then we wouldnt be in this pickle

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  • MP!s have a nice pension. Accrual raté of 1/30 . Their tax formula for valuation is also in their favor. Pension earned x 14. So 70k per annum before breach of the LTA. Gotta disagree that a one million pound calculated pot is a fat cat I m all right jack at all. It will not be worth terrible much at all for Anybody in 20 years time.

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  • Apparently they have a plan....
    Anyone else not holding their breath just jet?!

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