The government's proposed flexibilities for the NHS Pension Scheme have been branded a “sticking plaster” solution which will not stop doctors from reducing their hours, the British Medical Association has warned.
In its response to the department of Health and Social Care's ongoing consultation on the matter the union argued it was not possible for the “perverse implications of pensions taxation legislation to be resolved within a pension scheme”.
It wrote: “Therefore, any flexibilities introduced after this consultation – even if they are the most appropriate and creative flexibilities possible – will provide little more than a sticking plaster to cover the issue."
The government aims to allow defined benefit scheme members to choose a personalised pension growth level at the start of each tax year.
Members will then be given the option to top up their pension pots when they are clearer on their total earnings for tax purposes, or phase in increases in pensionable pay.
These measures, proposed in September, were a step further from the 50:50 split the government had initially proposed in July.
However, if a clinician chooses a lower level of accrual, and therefore pays less in contributions, the employer will also pay less.
The BMA officials said in their response today (October 24) they were “extremely disappointed” that the consultation does not include a specific proposal for the mandatory recycling of employer pension contributions.
These payments “form a vital part of a doctor’s total reward package and therefore without this, the flexibilities outlined are a significant reduction in the overall value of BMA members’ pay,” the union stated.
In its consultation the government stressed that "decisions on paying unused employer contributions will remain a matter for individual employers to take."
But the union argued: “This is highly regrettable, not least because it would be cost neutral to the employer and without the inclusion of recycling, the perverse incentive for doctors to reduce the work they do for the NHS will remain."
Should the pension flexibility proposal not be modified to include full and mandated recycling, the BMA will have no choice but to continue to advise its members that the flexibilities represent a substantial cut to their total remuneration package, it added.
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, most likely because of the taper on the annual allowance.
Introduced in 2016, the tapered annual allowance 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 taper means that for every £2 of adjusted income above £150,000 a year, £1 of annual allowance will be lost.
FTAdviser reported in August that HM Treasury will be reviewing the impact of the tapered annual allowance, after doctors were campaigning to scrap it.
According to Dr Paul Youngs, BMA pensions committee chair, doctors are trapped in a dilemma between wanting to care for patients and not wanting to end up financially worse off.