TaxNov 15 2021

NHS Scotland faces ‘exodus’ over pension tax issues

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NHS Scotland faces ‘exodus’ over pension tax issues

Dr Graeme Eunson, chairman of BMA Scotland’s consultant committee, said a recent survey found 70 per cent of consultants, when filtering out those too young to do so, are planning to take voluntary early retirement.

The Scottish government has said it meets regularly with the BMA and plans to invest an additional £4m in "staff wellbeing measures".

Therefore if action is not taken “urgently” the NHS faces an exodus of consultants from NHS Scotland in the near future, which will seriously undermine both the ability of the NHS to provide the care people need and the training of the senior doctors of the future, Eunson said.

He added: “Earlier this year we highlighted this problem, and asked for action, yet we have seen very little delivered that will practically help consultants. 

“We need to improve work life balance, ease workloads and ensure consultants truly feel valued through better pay.”

Pension tax charges were one of the key drivers pushing people out of the workforce before they are ready, according to Eunson.

The pensions tax system has been adversely affecting public sector schemes for a while now and although the 2020 Budget 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.

'Not rocket science'

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.

Eunson said: “It is not rocket science to understand that doctors who are tired and exhausted and then fearing they will be whacked by a massive pension tax bill, which they could avoid by either retiring or working less, are going to choose that option.

“While some of the worst cases of ‘paying to go to work’ were ameliorated by budget changes in March 2020 this remains one of the most pressing problems which consultants report to us. And it is a major threat to the future of the workforce.”

Eunson has urged the Scottish government to reintroduce and expand the recycling of employer contributions scheme with “immediate effect” and maintain it on an ongoing basis.  

This scheme gives employers a chance to 'recycle' unused employer contributions into additional pay for staff who take up the flexibility.

The scheme is available in England and Wales, but not in Scotland.

“We believe that reintroducing a REC scheme here would send out a strong and unequivocal message that the Scottish Government wants its senior doctors to remain in the workforce for as long as they can,” Eunson said.

“This alone will not be a fix-all, but offering NHS staff the ability to recycle employer contributions offers a powerful incentive to delay retirement and continue working for longer in the NHS – helping re-mobilisation and recovery of the NHS post-Covid.”

A spokesman for the Scottish government said: "The Cabinet Secretary for Health and Social Care meets regularly with the BMA where all issues related to the medical workforce are discussed. 

“We recognise the challenges health and social care services are experiencing. That is why we have announced a record £300m of new investment in measures to help services deal with system pressures over winter.

"To ensure our health and social care staff can continue to be able to best care for us, we need to make sure we continue to care for them by looking after their wellbeing this winter. This is why we are investing an additional £4m in staff wellbeing measures, in addition to the £8m made available through the NHS Recovery Plan."

amy.austin@ft.com

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