In its formal response to a government consultation on new flexibilities in the NHS pension scheme, the Association of Specialist Medical Accountants (Aisma) condemns the proposals as 'uninformed tinkering'.
The government launched a consultation last month on plans to allow doctors in the NHS pension scheme to choose 'a personalised pension growth level at the start of each tax year'.
Under the changes, which could take effect from April 2020, doctors would be able choose to reduce their contributions to bring down the rate at which their pension grows - reducing their chances of breaching annual allowance limits that can trigger heavy tax penalties.
NHS workforce
These tax penalties have had a devastating impact on the NHS workforce - with BMA polling suggesting that nearly all GPs in some parts of England have either cut their working hours or plan to do so. GPs also fear a huge knock-on rise in workload from a major reduction in hospital capacity after a recent survey found most surgeons had reduced their working hours over pension tax concerns.
Aisma warns that offering senior doctors the chance to reduce their pension contributions in an attempt to avoid tax penalties by slowing the growth of their pension pots would be discriminatory unless all NHS pension scheme members have the same choice.
The association calls for a far broader changes than the proposed flexibilities, warning that 'a complete re-think is required, and that must involve the provisions of the pensions tax legislation'.
Aisma questions the assumptions in the government consultation paper, warning that a reduction in contributions will not necessarily bring an equivalent percentage reduction in pension growth - and that the plans risk creating an even more complex pension system.
Pension lottery
For GPs, Aisma warns that planning around pension contributions is a 'lottery for all but those with the very best specialist advisers'.
It warns that underperformance by Primary Care Support England (PCSE), the outsourced support service run by private provider Capita, has left many GPs unclear what their current position is with respect to pensions growth - and that practice profits can vary significantly, making it extremely difficult to predict pension contributions in advance.
The association's response adds that for GPs: 'Forming an impression of what might be a reasonable percentage of pay to pension so as not to accrue a pension charge is a game of chance. In addition, it is highly unlikely that PCSE would be able to process in-year changes to the rate of pensioning to ensure that higher contributions would be collected in a timely manner so that tax relief can be claimed in the year.'
Aisma vice chair Deborah Wood, healthcare services partner at accountancy firm MHA Moore and Smalley, said: 'These proposals do not make it any easier for doctors to understand their pension position. Deciding on a reasonable percentage of pay to pension to avoid a tax charge represents a game of chance for all doctors and for GPs this is compounded by out-of-date records due to the underperformance of PCSE.
'Doctors would welcome a simplified system that was fairer and allowed a reduction in the fees for professional accountancy, tax and pensions advice. This could be achieved if the government decides to act on the recommendation of its independent tax adviser, The Office of Tax Simplification, which is to scrap the annual allowance cap on pensions.'
