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Jeremy Hunt to reform pension tax to retain doctors

Jeremy Hunt to reform pension tax to retain doctors
By Jess Hacker
15 March 2023

The Government will abolish the lifetime pensions allowance in an effort to prevent GPs and doctors leaving the NHS, Chancellor Jeremy Hunt announced in today’s budget.

Presenting his spring budget to the Commons, Mr Hunt said the charge – which dictates the amount a person pays into their pension before tax – would be lifted and scrapped to remove ‘barriers to remaining in work’.

The Annual Allowance will also be increased from £40,000 to £60,000, with Mr Hunt claiming the changes would ‘stop over 80% of NHS doctors from receiving a tax charge’.

In Healthcare Leader’s new workforce report, the BMA GP Committee’s deputy chair cited ‘punitive pension taxation’ as a major factor ‘driving talented doctors away from the NHS’.

Mr Hunt today told MPs: ‘I have listened to the concerns of many senior NHS clinicians who say unpredictable pension tax changes are making them leave the NHS just when they are needed the most.

‘The NHS is our biggest employer and we will shortly publish a long-term workforce plan that I promised in the autumn statement – but ahead of that I don’t want any doctor to retire early because of the way pension taxes work. No one should be pushed out of the workforce for tax reasons.’

The Chancellor also reconfirmed the independent NHS workforce report would be released soon, following reports the Treasury was halting its publication.

Commenting on the reform, the BMA said the measures should close the floodgates and keep more senior doctors in the NHS workforce.

Dr Vishal Sharma, chair of the BMA Pensions Committee and the Consultants Committee, said: ‘The scrapping of the lifetime allowance will be potentially transformative for the NHS as senior doctors will no longer be forced to retire early and can continue to work within the NHS, providing vital patient care.’

She added: ‘It is also vital if we don’t want to end up in this situation again that these limits must be kept under review to ensure their value is not eroded in real terms. Otherwise, we will simply find ourselves in the same situation in a few years’ time.’

However, others in the sector have criticised the overall lack of action on staffing.

Matthew Taylor, chief executive of the NHS Confederation, welcomed the pension reforms but said the budget provides no further clarity on how to address the NHS staffing crisis.

He said: ‘Every NHS leader in the country was also hoping for the publication of the long-awaited workforce plan. The government should be credited for committing to publish the plan, but with 124,000 vacancies this is now long overdue. We need to see that plan shortly and it needs to be fully funded. Without this, the NHS will be in permanent crisis management mode, and we need to offer NHS staff hope that this longstanding issue will be addressed.’

Steve Brine, MP and chair of the Health and Social Care Committee said: ‘I welcome the Chancellor’s announcement to reform tax arrangements that have led to experienced senior doctors retiring early because of the financial penalties they faced as a result of their NHS pensions. The loss of this dedicated and specialist workforce was a price the NHS could not afford to pay.

‘The health and social care sectors cannot function effectively without a workforce strategy to meet future demand. This Committee has repeatedly urged Ministers to produce a workforce plan and we look forward to it being published shortly, as promised today.’

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