Tax  

Number of doctors retiring early trebles

Number of doctors retiring early trebles

The number of doctors retiring early has more than trebled over the past 13 years, with concerns that hefty tax bills are driving the action.

A Freedom of Information request from the NHS Business Services Authority, submitted by the BMJ, showed in 2020-21 1,358 GPs and hospital doctors in England and Wales took voluntary early retirement or retired because of ill health, up from 401 in 2007-08.

In addition, the total number of doctors retiring rose by 21 per cent, from 2,431 in 2007-08 to 2,952 in 2020-21. 

According to the BMJ, the figures relate to doctors who claimed their NHS pension in a specific pension year, some of whom may have returned to work in the NHS in other roles after claiming their pensions.

It also found doctors who retired early were getting younger with the average age being 59, compared with 61 in 2007-08.

The British Medical Association (BMA) said pensions taxation was one of the main reasons prompting this movement.

Dr Vishal Sharma, chair of the BMA pensions committee, said: “This data from NHS Pensions clearly demonstrates the problem as it shows that the number of doctors retiring early has increased nearly four-fold since the government began altering the NHS pension scheme and pensions taxation rules. 

“To make things worse, we know that the strain of working through the pandemic has left doctors exhausted and they continue to battle stress and burnout.

"Many have had their annual leave cancelled and they have not had adequate time to rest and recover from the tumultuous year they have had, with no sign of let up as they now face the biggest backlog and waiting lists since records began.”

Long-running issue

The pensions tax system has been adversely affecting doctors for a while now and although the Budget 2020 lifted the ‘adjusted income’ and ‘threshold income’ levels under the tapered annual allowance by £90,000 for the 2020/21 tax year, there is still a legacy of annual allowance issues for many doctors.

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 rules have forced senior clinicians and other high earning public sector workers to either leave their pension scheme, cut down on their working hours or retire early to avoid punitive tax bills.

Doctors who have taken on extra shifts due to the pandemic are also at risk of being hit with large tax bills because of continuing issues with this charge.

James Jones-Tinsley, self-invested pensions technical specialist at Barnett Waddingham, said: “It’s sickening that a primary reason for doctors taking early retirement is the way in which continuous tinkering with the pension taxation regime by successive governments since 2009 has impacted NHS staff. 

“It’s created a number of ‘tax traps’ that ensnare members of the NHS Pension Scheme, as they are building up their pension benefits and when they come to take them.