The Health and Social Care secretary has promised a solution for the pension tax issue affecting doctors by April 2020 at the latest.
Speaking at a Health and Social Care committee hearing yesterday (July 9) in Parliament, Matt Hancock said the issue was "an urgent priority" for the government and promised the consultation will not be restricted to a partial pension option.
Plans to introduce a 50:50 option, as previously floated, would allow clinicians to halve their pension contributions in exchange for halving the rate of pension growth.
However, the doctors’ union argued that the 50:50 proposal would not remove the incentive for doctors to reduce their working hours.
Mr Hancock acknowledged the BMA’s stance and said there would be room for other ideas in the consultation.
He said: "The consultation will include open questions as to how best to solve this problem, so everybody will be able to respond to the details that we put out.
"This [tax issue] has to be solved with a consultation first, I want to get the paper out as soon as possible, and we are putting the final touches on that consultation."
He added: "I met the [British Medical Association] BMA yesterday to discuss it, it was a constructive discussion, the Treasury is engaged.
"At its core, this is a tax policy rather than a health department policy, but the biggest impact is in my area. We are committed to resolving it by the new financial year."
FTAdviser reported yesterday that candidate for the Conservative party leadership Boris Johnson vowed to make changes to the lifetime allowance as a way to solve this issue.
The lifetime allowance is the limit on the amount of money that can be saved in a pension without triggering a tax charge, which applies equally to all taxpayers.
Concern about doctors' pensions, however, have increased significantly since the introduction of the tapered annual allowance in 2016.
This gradually reduces the allowance for those on high incomes, meaning they are more likely to suffer an annual tax charge on contributions and a lifetime allowance tax charge on their benefits.
The tapered annual allowance means that for every £2 of adjusted income above £150,000 a year, £1 of annual allowance will be lost.
It emerged in December that the number of members leaving the NHS Pension Scheme was five times higher than that seen by other public pension funds.
Mr Hancock said: "[For] people that are affected by the lifetime allowance, I would strongly recommend that they take no precipitant action in terms of early retirement, because we are going to fix this problem.
"And for people affected by the annual allowance I understand the problem, but we still need to make sure that we will find solutions urgently so that people can do the work they want to do and that the NHS needs them to do."