The NHS Business Services Authority has paid £35m in tax bills for its members during 2016/17, as a result of members breaching their annual allowance limit.
As reported by FTAdviser’s sister title the Financial Times, the NHS Pension Scheme received 3,949 requests during that year to use scheme pays.
Scheme pays is a facility which allows savers to ask their pension scheme to pay any excess over the annual allowance of £40,000.
According to the NHS data, about 1,500 of 2,442 individual members who used scheme pays to settle an annual allowance charge in 2016/17 were in their fifties. About 100 were in their thirties.
These numbers are expected to increase after the government's move to allow members to also use scheme pays for tapered annual allowance breaches. Currently members can only use facility for breaches of their annual allowance.
The tapered annual allowance is applied to high earners, and means that for every £2 of income above £150,000 per annum, £1 of annual allowance will be lost.
This means if savers are high earners and have their annual allowance tapered to £10,000, they would have to find cash to cover tax on £30,000.
Matt Hancock, secretary of state for Health and Social Care, asked the NHS Business Services Authority to introduce this change as concerns about doctors' pensions increased significantly since the introduction of the tapered annual allowance in 2016.
It emerged in December that the number of members leaving the NHS Pension Scheme was five times higher than that recorded by other public pension funds.
Meanwhile, the British Medical Association (BMA) and NHS England are proposing the option of a partial pension for scheme members, in order to help reduce the number of opt-outs at the pension fund.
maria.espadinha@ft.com
