Tapered annual allowance for senior NHS clinicians to be reviewed
08 August 2019
A new consultation is to be published which proposes full flexibility over the amount senior NHS clinicians put into their pension pots.
To address the issues around care in the NHS the Department of Health and Social Care (DHSC) will be replacing its recently published 50:50 consultation with new proposals to change pension rules for top doctors, surgeons and other high-earning clinicians to allow them to take on extra shifts and treat more patients without losing out financially.
The NHS Pension Scheme is recognised as one of the most generous in both the private and public sector. But the tapered annual allowance means some clinicians can face tax charges. The allowance has been reduced from £255,000 a year in 2010-11 to £40,000 - and drops still further for the highest earners. Around a third of NHS consultants and GP practice partners have earnings from the NHS (£110,000 plus) that could potentially lead to them being affected by the tapered annual allowance.
Starting from April 2020, the new rules would allow senior clinicians to set the exact level of pension accrual at the start of each year. For example, 30% contributions for a 30% accrual rate, or any other percentage in 10% increments depending on their financial situation. This would give them room to take on additional work without breaching their annual allowance and facing tax charges.
The proposals follow the commitment made in the NHS People Plan to deliver a fairer and more flexible approach to the NHS Pension Scheme for senior clinicians.
Guidance will also be given to employers setting out how they can provide flexibility at a local level this financial year for clinicians to do extra work without breaching limits for pensions tax relief. This will allow affected staff to opt-out of the NHS pensions scheme mid-year. Their employer will be able to use discretionary flexibility to maintain the value of the clinicians’ total reward packages.