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Doctors will go part-time if pension rules are not changed, BMA warns

Laura Donnelly
The BMA has written to the Chancellor  - PA

 

NHS consultants are better off working part-time under new Treasury pension rules, unions have warned.

The British Medical Association (BMA) has raised fears that the majority of senior doctors will end up opting to cut their hours or work part-time as a result.

A letter to the Chancellor warns that some consultants will see a significant drop in their pension - unless they go part-time.

The calculations by the union suggest that a senior doctor working a three and a half day week could end up with an annual pension of £65,000 - which would drop to £55,000 if they continued to work a full week.

The situation has arisen because senior consultants are being caught by cuts to annual limits on pension savings, now just £10,000 for those earning above £150,000.

This lands them with yearly tax bills to be paid immediately on money they have no access to until they retire.

The taper affects those earning more than £110,000 a year, to varying degrees. 

High earners also face losing hundreds of thousands of pounds when they begin taking money from their retirement pots because they have inadvertently breached the lifetime allowance on pension saving, which has also been cut.

In the last Budget, the chancellor lowered the pensions cap from £1.25m to £1m. From this month, doctors who go above this sum will be exposed to a 55 per cent tax charge when they withdraw their pension.

Some doctors say that they have received sudden tax bills of as much as £100,000 or effective rates of 100 per cent as a result of the combined changes.

Dr Phil de Warren-Penny, from the BMA’s consultants committee raised fears that without changes, almost every consultant working for the NHS would cut their hours, or go part-time within five years.

He said growing numbers of consultants were refusing to take on extra shifts, in a bid to limit their tax liability.

“The current situation has created a cliff edge, so that consultants can be looking at a tax bill of £13,000 for doing a few hours’ extra work that would earn them a few hundred pounds,” he said.

Currently the average consultant works 48 hours a week, but within five years almost every doctor would choose to reduce this, or go part-time, unless the rules change, he said.

The BMA said the situation was "shocking"

The letter to the Chancellor warns: “Unless there are urgent mitigations, we are convinced this will result in consultants reducing their NHS activity on an unprecedented scale. Not only will this seriously impact patient care, it will drive up costs to the NHS as employers would

require to reprovision services from the vastly more expensive locum, agency and independent

sectors.”

Danny Mortimer, chief executive of NHS Employers, said: “The health service is suffering from a severe workforce shortage, and any suggestion that skilled senior clinicians are looking to reduce or end their NHS commitments should be cause for alarm.

“There is mounting concern about the impact of pensions tax allowances, and especially the tapered annual allowance for higher earners.”