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The waiting game

Hancock promises to fix pension tax problems by April 2020

The health secretary has urged doctors not to take steps to retire early yet as he is committed to solving pension tax issues by the 'new financial year'.

It comes after the Government announced a review to make pensions 'more flexible' for GPs in a bid to address retention issues

More than 50% of GPs plan to stop practising before retirement age for reasons including problems with pensions, according to a new survey.

Health secretary Matt Hancock told the Health and Social Care Committee yesterday that he regards the pension tax issue as 'very serious' and an 'urgent priority' that has to be solved 'as soon as possible'. 

Doctors should 'take no precept of action in terms of early retirement' because the issues will be fixed soon, he said. 

He revealed that the upcoming consultation on the proposals to make pensions flexible will include 'open questions' to allow respondents to share their ideas on how to best tackle the problems.

The Government is proposing to allow doctors to halve their contributions - to reduce their pension growth by 50%, thereby avoiding tax charges. 

However, the Government revealed last month it had no intention to review the tax charges themselves

Under the current NHS pension scheme, there is no flexibility in the amount of money NHS employees contribute towards their pension – with the highest earners required to pay at least 14.5% of their salary.

The annual cap on how much pension pots are allowed to increase by, tax-free, has been set at £40,000 since 2016. At the same time, new rules were brought in reducing the amount of tax-free pension benefits that can be accrued over a lifetime - from £1.25m to £1m.

Mr Hancock said he is committed to fixing the problems surrounding pensions by April 2020.

He said: 'I regard [the pension] issue as very serious. I think there’s a significant problem, which is an unintended consequence of the different tax changes and its interaction with the NHS pension scheme. 

'The interaction between the pensions tax regime and the NHS pension is very complicated but I’m absolutely determined to solve the problem. This is an urgent priority that we are taking forward.'

He added: 'We’re committed to resolving it by the new financial year. For people that are affected by the lifetime allowance, I would strongly recommend they take no precept of action in terms of early retirement because we’re going to fix this problem. For people who are affected by the annual allowance I understand the problem but we still do need we make sure we find solutions urgently so that people can do the work they want to do and that the NHS needs them to do.'

'The 50:50 proposal would go somewhere to solving some of the problems. The BMA makes the case that it doesn’t solve all the problems, I’ve heard that case.

'The consultation will include open questions as to how best to solve this problem so everybody will be able to respond to the details we put out explaining how they think best to solve the problem but we’re just working on the final details of that following the meeting with the BMA yesterday.'

'We’re trying to fix this problem and we understand the interactions and we’re going to try and fix them as soon as possible,' he said.

Health and Social Care Committee chair Dr Sarah Wollaston said she is aware of a number of GPs who have faced delays in getting updated information about their pension pot from Primary Care Support England - run by Capita - , which has resulted in 'many young doctors refusing to take on extra hours' because they do not know how liable they will be in the future. 

In response, Mr Hancock said he has not heard of such issues but argued that in many cases concerns are based on rumours.

He said: 'In many cases people raise concerns that are not fully founded. I’ve looked into a number of cases where the problem for an individual is not nearly as big as they worry about. 

'For instance, I’ve seen cases where people have said they have been faced with a very large upfront total tax bill but we have already changed the rules to ensure people do not have to pay cash tax bills upfront and instead can ensure that it’s swallowed within a rising pension pot. So there are a number of areas where people are understandably concerned because they’ve heard rumours and rumours are much worse than reality.'

Mr Hancock added he will make sure individuals can access up-to-date information about their pension. 

He said: 'I will fix the substance but I also want to provide people with the reassurance that in many many cases doing extra work does increase their total remuneration and the problem isn’t nearly as big as is feared.

'Getting the facts out there so we can reassure people but also so that people get the up-to-date information as fast as possible about what the actual impact on their total pay is I think is only fair.'

Readers' comments (22)


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  • I honestly wonder what goes through the heads of those sitting on Medical School Interview Panels?

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  • Took Early Retirement

    Jam tomorrow- again. Believe him at your peril.

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  • I wouldn't listen to someone who is having to resort using food stamps instead of money to pay employees:

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  • 54 leaving in September

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  • doctordog.

    Too late too late too late too late

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  • That's a good promise. By that time the GPs threatening to retire will have retired or somebody will have shifted portfolios or jobs, so there will be no issue.

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  • David Banner

    So, a senior doctor who received a £10- £20-£30k annual allowance bill out of the blue last year is going to “hang on” whilst a health secretary (who may well be shuffled out of a job in a few weeks) promises he’ll fix it next year (with zero detail on how) despite the repeated flat refusal of the Chancellor to change anything (fearful of “tax cuts for the rich” media coverage no doubt).
    Good luck with that, Matt.

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  • Dear Mr Hancock you don't even believe there is a problem and this is based on rumours .
    Fact we were struggling for staff at our practice so being part time I worked extra hours.
    Fact my remuneration was taxed at 40%
    Fact I ended up over paying into m y pension by £27k
    Fact this was then punished by taxing part of the over payment by 40% and the rest by 45%
    Fact I shouldn't have bothered I increased my stress decreased my free time and came out with F*ck all.
    Fact my accountants say I should drop my hours further
    Fact you can not keep people in jobs or get them to work overtime and cut your waiting times if this continues
    Fact You Sir are an idiot and think the NHS Can be run like Facebook or Instagram.

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  • Good luck with that laddie. There’s no money left for your empty pipe dreams. Of course some of your government goons will find a way to further inflate the uk currency away at will in order to provide the illusion of government solvency.

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