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Pensions taxation pushing GPs to consider early retirement


lifetime allowance


Exclusive Pensions taxation has prompted nearly 40% of GPs to consider early retirement, a Pulse survey has shown ahead of today’s Budget.

The Government has made a commitment to resolve the issues around NHS staff pensions via the Budget due to be announced today.

And a Pulse survey of 746 GPs, found that 38.5% said that they had considered early retirement and pensions taxation was a factor.

Out of these, 8.5% said pensions taxation was the sole factor which has pushed them to consider early retirement.

The survey also revealed that nearly a quarter of GPs (23.5%) had cut shifts as a result of pensions taxation.

Under the current NHS pension scheme, the highest earning GPs pay at least 14.5% in contributions, but an annual allowance worth £40,000 limits the amount of money that can go into the pension pot each year without facing significant tax penalties. 

The allowance is also reduced where individuals earn a yearly net income exceeding £110,000 – or an adjusted income exceeding £150,000 – with the taper stopping at a minimum annual allowance of £10,000. 

Dr May Cahill, who was a locum GP in Hackney, told Pulse she retired early partly because of pension considerations.

She said: ‘The pension thing was a large driver to taking early retirement. I came to the conclusion that I was working for 40p in the pound by the time you took everything into consideration, and I thought this is a bit silly really.

‘Obviously, I’ve taken a lower pension as a result, but it is still worthwhile to do that rather than carry on in the scheme and have ever-burgeoning costs. There was nothing to entice me to stay in the pension scheme. I think the NHS have lost an awful lot of very good people and I think a lot of that had to do with the pension situation.’

Dr Iain Ashworth, a GP in Lancashire, took 24-hour retirement because of the punitive tax he would have been paying when going above his lifetime allowance.

He said: ‘Paying such levels of taxation, even on the margins, and having a cap, is morally indefensible, as far as I’m concerned.’

‘As a higher tax level contributor over many years, this is just another kick in the teeth for those who pay. Taxation is at its highest level for many decades. I think the over-regulation and voracious demand has recently taken some of the gloss off the vocation,’ he added.