The chancellor is expected to increase the amount that workers can accumulate in their pension savings before paying extra tax, in a bid to retain GPs and other NHS workers.
The final figure has not yet been confirmed ahead of Jeremy Hunt’s budget tomorrow, but workers are expected to be able to save up to £1.8m over a lifetime.
The Government said that millions could benefit from the rise, reports said, including those working in the public sector, with a particular focus on doctors, who chose to ‘retire early’ or ‘reduced hours for pension tax reasons.’
The chancellor’s plans to boost the economy also include increasing the £40,000 annual cap on tax-free contributions to pensions to £60,000.
At the same time, the Department of Health and Social Care has today launched a consultation on a draft statutory instrument which will make changes to NHS Pension Schemes Regulations, to facilitate the retrospective part of the McCloud remedy.
The new consultation about the second and retrospective part of the McCloud remedy will remove the effect of the transitional protections. For NHS Pension Scheme members impacted by the discrimination, the retrospective remedy primarily:
- returns members who moved to the 2015 scheme back into the legacy scheme for their pensionable service (‘remediable service’) effected by the discrimination during the remedy period, from 1 April 2015 to 31 March 2022, which in this consultation is referred to as ‘rollback’
- offers a choice of whether to receive, legacy scheme benefits or 2015 scheme benefits for their remediable service benefits, both of which are payable from the legacy scheme
According to the Department of Health, the draft National Health Service Pension Schemes (Remediable Service) Regulations 2023 should allow eligible NHS Pension Scheme members to make a retrospective choice and ‘put them, as far as possible, in the pension position they would have been in had the discrimination not occurred.’
In July last year, the BMA said the Government ‘continues to get things wrong when dealing with the NHS pension scheme and still fails to understand the detrimental impact that the complex NHS pension system and punitive pension taxation arrangements are having on members’.
GP pension experts warned that an average GP could be hit by a ‘nightmare’ £33k tax bill due to the ‘unfair’ way inflation is applied to their pension.
And a Pulse survey which revealed that half of the existing GP workforce plans to retire at or before the age of 60 saw doctors quote problems around pensions as a significant reason.