16 March 2023

Doctors ‘want to cancel retirement’ after tax break on pension savings

16 March 2023

A tax break aimed at discouraging thousands of high earners from leaving the workforce early has already led to doctors wanting to cancel their retirements, according to the British Medical Association (BMA).

Chancellor Jeremy Hunt said the abolition of the tax-free cap on the lifetime pensions allowance included in his Budget was needed to keep doctors in work as the NHS spends billions on agency staff.

The move to scrap the allowance standing at £1.07 million will end up costing more than a billion pounds per year and, it is estimated, prevent 15,000 people from retiring early.

The measure is primarily aimed at NHS consultants who have been leaving the health service because they say the pension rules mean it is not worth them carrying on.

Dr Vishal Sharma, a cardiologist and BMA pensions committee chairman, has welcomed the “decisive action” taken by Mr Hunt.

Dr Sharma told BBC Breakfast the NHS has been “losing doctors ever since pension rules started to be tinkered with”.

He said: “And over the last sort of 10 or 12 years, the number of hospital consultants that have taken early retirement have tripled, and for GPs it has been nearly four times.

“And we’re really heading towards a sort of precipice where huge numbers were going to go unless things changed.

“So it’s really welcome that the Chancellor’s listened to our concerns and actually taken some decisive action.”

Dr Sharma said a survey last year showed 44% of consultants were threatening to leave in the next 12 months, with around half of those thinking of retirement.

“Hopefully those people will now start to stay,” he said.

“We’ve already had lots of people contacting us saying they want to cancel their retirements, we’ve had people who’ve already retired contact us saying they want to come back, so it’s looking positive, but we have to wait and see how it impacts.”

Asked about nurses and junior doctors on the picket line and how people may think money is heading in the wrong direction, Dr Sharma said: “We understand that a lot of people can’t even afford to pay into a pension, and we absolutely understand that, but the tax rules should never really be a disincentive or a barrier to actually carrying on working, and they should never be driving you out of the workforce.

“And that’s what they were doing. So that’s why it needs to be fixed because we want people to stay in work, we want people to carry on working and these rules were actually making people leave.”

Meanwhile, Labour has pledged to scrap Mr Hunt’s “gilded giveaway” to higher earners.

Shadow chancellor Rachel Reeves said: “The Budget was a chance for the Government to unlock Britain’s promise and potential. But the only surprise was a one billion pound pensions bung for the 1%, a move that will widen the cost-of-living chasm.

“At a time when families across the country face rising bills, higher costs and frozen wages, this gilded giveaway is the wrong priority, at the wrong time, for the wrong people.”

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