This site is intended for health professionals only

Treasury to review NHS pension annual allowance taper

The Government is to review the NHS pension annual allowance taper as part of its overhaul of pension rules in a bid to relieve the tax burden on the higher earners.

The Treasury is set to review the taper to ‘support the delivery of public services, such as the NHS’. 

Chnages will also see GPs able to set their own pensions contributions in a move that replaces the 50:50 proposal

It follows calls from the BMA and RCGP for the new Prime Minister Boris Johnson to concentrate on taking actions on pensions and GP recruitment.

Under current rules, people are allowed to increase their pensions pot by £40,000 per year before incurring a tax charge. 

However, this annual allowance reduces, with those earning above £150,000 per year having an annual allowance of £10,000.

GPs have previously warned that this has led to them cutting their hours or leaving the profession altogether, as well as leading to problems with recruitment and retention.

Chancellor Sajid Javid said: ‘This Government is committed to ensuring that British people see a real difference in public services, including getting quicker GP appointments, and a reduction in waiting times.

‘Critical to that is introducing flexibility into the system so that our hospitals have the staff they need to deliver high-quality patient care, which is why we’ve listened to concerns and will be reviewing the operation of the tapered annual allowance. This will help to support the delivery of our vital public services.’

Dr Chaand Nagpaul, BMA council chair, said: ‘It is positive that the Chancellor has committed to review the punitive tapered annual allowance – this marks and important step change from the Government, and comes as the direct result of the BMA’s campaigning.

‘The BMA will be glad to take up the invitation to work with the Chancellor, but we will continue to argue that wider reform to the annual allowance itself is also needed to guarantee changes that will solve the problem for all doctors.’

Dr Nagpaul added: ‘We know that more than a third of doctors have already reduced their work commitments over pension tax charges, and of those who haven’t already, a third plan to. Without fundamental change to these rules, this situation will only worsen, leaving patients with fewer experienced medics to care for them and even longer waits for treatment.’

Many GPs saw little benefit in continuing to pay into their fund following this change and would therefore stop working.

It comes after four in 10 GPs have reduced shifts over pension tax penalties, according to a BMA survey.