Govt puts guarantee on doctors' pensions

Govt puts guarantee on doctors' pensions

The government will guarantee that senior clinicians' pension tax bills will be paid even if the employer ceases to exist, the secretary of state for Health and Social Care has said.

In a statement published on December 7, Matt Hancock said should the NHS trust or foundation trust employing the clinician cease to exist there are provisions which assure that the liabilities would be transferred to other NHS bodies or the secretary of state.

“The secretary of state ultimately takes responsibility for the liabilities of NHS bodies including NHS England and NHS Improvement,” he noted.

In November it was announced that doctors and consultants in England will have their pension tax bills covered by the government in an attempt to fix the crisis engulfing the NHS.

Mr Hancock stated the commitment to make these payments will be contractually binding.

If there is no employer or other NHS body to make this payment at the time the clinician retires or when the payment is due, the secretary of state will take responsibility for it and ensure that the payment is made, he added.

Last month, NHS England announced that tax bills incurred by senior physicians in the current tax year will be covered by the NHS Pension Scheme under scheme pays until a permanent fix is found.

Scheme pays allows savers to settle annual allowance tax charges of more than £2,000 through the pension fund without needing to find funds upfront. Instead, their benefits are adjusted at retirement and will pay interest.

The government will make good on any reduced pension before the doctors reach retirement but the measure will only apply to the 2019/20 tax year.

“Clinicians are therefore now immediately able to take on additional shifts or sessions without worrying about an annual allowance charge on their pensions,” Mr Hancock said.

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.

A consultation on the rules of the NHS Pension Scheme was published in September, which included a proposal to allow members to choose a personalised pension growth level at the start of each tax year.

What do you think about the issues raised by this story? Email us on to let us know.