The Department of Health and Social Care (DHSC) will meet with the Treasury to ‘look at’ GP pension concerns, the primary care minister has said.
Current pensions taxation rules, in particular around lifetime and annual allowances, push GPs to reduce their hours or retire early to avoid large tax bills.
The lifetime allowance is the maximum amount you can put into a pension pot without triggering an extra tax charge on retirement. If a pension pot exceeds the allowance, it is then taxed heavily when you retire.
Meanwhile, under the current NHS pension scheme, the highest-earning GPs pay at least 14.5% in contributions, but a tapered annual allowance limits the amount of money that can go into the pension pot each year without facing significant tax penalties.
Speaking at a Commons debate on access to GP appointments yesterday, primary care minister Maria Caulfield said the DHSC has ‘discussed’ the ‘GP pension issue’ and will ‘certainly’ be looking at it ‘further’.
She added: ‘We are setting up a meeting with Treasury teams to look at that more in-depth [as] there is no doubt that there is a disincentive to stay in practice.’
It came in response to comments from NHS hospital doctor and Conservative MP for Central Suffolk and North Ipswich Dr Dan Poulter, who told MPs that GP pensions are a ‘very real issue that is stopping the current workforce from extending their careers’.
He said: ‘[GPs] are facing very punitive penalties in terms of their tax. Would the minister please commit to addressing that issue and raising that with the Treasury.’
Conservative MP for Barnet Theresa Villiers added that the Government must ‘get better at retaining GPs that we have’, which ‘means fixing the problem with doctors’ pensions’.
She said: ‘I know efforts have been made on that, but it’s still worrying that it seems that once a doctor has been in practice for many years, they can face a big tax bill for their pensions.
‘The last thing we should be doing is to push GPs into early retirement because of punitive pension taxes. We want them to stay in practice and not retire.’
Pulse has asked the DHSC what stage the discussions with the Treasury are at.
The DHSC is currently responding to a consultation on changes that could see GPs pay less in pension contributions from April.
The Government has previously committed to resolving NHS pensions issues, but in February rejected calls to reform GP pensions taxation, arguing the problem had already been addressed.
And in March, the Government announced it had frozen the lifetime allowance for GP pensions until at least 2025/26.
Ahead of the announcement, the BMA had warned that such a move, which is designed to raise more tax, could lead to a ‘catastrophic exacerbation’ of NHS workforce shortages.
More recently, the BMA has repeated calls for the Government to reform pension taxation to avoid doctors facing large tax bills.
It comes as the BMA started formal steps in November to request a judicial review into the Government’s ‘unlawful’ handling of NHS pensions.
And the pensions ombudsman upheld a complaint against Capita and the NHS Business Services Authority (NHS BSA) for ‘negligently’ handling the pensions contributions of a doctor who was later hit with a hefty tax bill.
