The British Medical Association has rebuked NHS England and NHS Improvement for what it calls “misleading” information about “punitive pensions taxation” and its impact on staff retention.
As reported by The Times, the NHS is pleading with doctors to postpone their retirement as the healthcare system faces a significant backlog in cases, partly resulting from the Covid-19 pandemic.
NHS England has written to hospital leaders asking them to entice retired doctors back to work and to encourage those due to retire to postpone that decision and continue working.
As part of this campaign, NHSEI have been keen to stress the alleged pension benefits of working longer, but it is this claim with which the BMA has taken issue.
On its website, NHSEI argues that it can still be beneficial to continue working even after reaching the lifetime allowance limit, as it is still possible to build pension income after accounting for the higher pensions tax that would be applied.
It provides an infographic purporting to show that someone who retires at aged 60 without breaching the LTA limit would have an annual pension income of £46,630 and a lump sum at retirement of £139,891.
Meanwhile, someone retiring at 61 and breaching the LTA limit would take home £48,306 — a figure of £1,676 more than retiring at 60 — and £146,762 as a lump sum, an increase of £6,871.
This prompted the BMA to issue a press release and write a letter to NHSEI expressing its “serious concerns” about what it called “inaccurate and misleading” information, arguing that — far from being better off — people retiring a year later and breaching the LTA limit could suffer significant losses.
Doctors would be worse off, not better off
In its letter, sent to leaders at NHSEI and the NHS Pension Scheme Advisory Board, BMA pensions committee chair Dr Vishal Sharma and deputy co-chairs Drs Tony Goldstone and Krishan Aggarwal expressed their dismay that NHSEI continues to publish these allegedly inaccurate claims, which are now being cited by government ministers as though they are true.
In a written question in parliament on April 25, Conservative MP Dr Dan Poulter asked health secretary Sajid Javid “what assessment he has made of the impact on NHS staffing and retention of the (a) £40,000 annual pension threshold for both pension contributions, and (b) annual increase in total pension value”.
In response, health minister Edward Argar said: “It is not possible to isolate the impact of a single factor such as the annual allowance on staff choosing to reduce their working hours or take early retirement. The annual increase in pension value for the vast majority of NHS staff is expected to be within the £40,000 annual allowance for tax-free pension saving and is unlikely to impact retention.
“However, the highest earners within the NHS will find that the generosity of the NHS Pension Scheme means they exceed their annual allowance. Where this occurs, the scheme pays facility is a proportionate means to meet the cost of an annual allowance charge from the value of pension benefits.”