Pensions  

Doctors are victims of their own bad medicine

Maria Espadinha

Maria Espadinha

The news stories about doctors retiring early and leaving the NHS altogether are a constant nowadays.

Even as I write this article, new data from the NHS Business Services Authority, quoted by The Daily Telegraph, showed that almost 1,000 GPs and hospital consultants opted to retire early last year, compared to 384 a decade ago.

The solution to the problem, they say, is to scrap the tapered annual allowance, which means that for every £2 of adjusted income above £150,000 a year, £1 of annual allowance will be lost.

It is, indeed, a perfect storm in the case of doctors – who have multiple sources of earnings – and especially consultants who work privately as well, which makes it much harder to calculate their yearly income.

The rules in the scheme itself are strict, and do not allow a great deal of flexibility when it comes to partial pension payments – with the highest earning consultants contributing 14.5 per cent of their pensionable pay per month.

But we might ask, why are we discussing this issue now, and not three years ago, when the tapered annual allowance was introduced?

Firstly, it is due to the ability to carry forward unused annual allowance amounts, which has a limit of three years.

This means that the 2018 to 2019 tax year was the last time a continuous high earner could make the most of any unused £40,000 annual allowance.

Secondly, we all know HM Revenue & Customs takes some time checking if people are paying the right amount of taxes, and there might have been some delays in doctors receiving their tax bills.

In 2016, only 16,500 individuals told HMRC that they had an annual allowance charge to pay due to the tapered annual allowance.

In reality, the number should be higher, as some savers might not have been aware of breaches, but we are still talking about less than 100,000 people.

What strikes me as unbelievable is that most of this could have been avoided.

I am sure most doctors will tell their patients that checking health symptoms or potential diseases on Google is not right. Patients need expert opinions and exams to determine their illnesses.

So why don’t they take their own advice, and go to an expert to sort out their finances?

Most of us will never earn enough money to be affected by the tapered annual allowance. But if I did, the first thing I would do would be to get financial advice.

Because even though I write about tax and pensions every day, I am not an expert. Financial advisers are. They spend years studying for their exams.

I have seen comments on Twitter from doctors trying to calculate their adjusted income on their own. It is madness, I say.