GPs quitting NHS pension scheme en masse to avoid tax penalties

One in five GPs in England have quit the NHS pension scheme to avoid heavy tax penalties that can leave doctors paying more than they earn for taking on extra work, a GPonline survey suggests.

(Photo: Andrew Brookes/Getty Images)
(Photo: Andrew Brookes/Getty Images)

A total of 19% of GPs in England who took part in a GPonline opinion poll said they had quit the NHS pension scheme because of concerns over tax penalties that can leave doctors with unexpected five- or six-figure bills to pay.

Some 12% of respondents had quit the scheme permanently, while 7% had quit temporarily - and a further 31% of GPs who took part in the poll said they were considering leaving the NHS pension scheme.

Among partners and locum GPs, the figures were higher still. Among partners, 13% had quit the NHS pension scheme permanently, 8% temporarily, and 41% were considering leaving. Among locums, 18% of respondents said they had quit the scheme permanently, 11% temporarily and 23% were considering doing so.

NHS pension scheme

Around one in six GPs overall said they had quit the NHS pension scheme either permanently or temporarily. A total of 498 GPs across the UK responded to the survey, with 440 of these in England.

The findings suggest that the long-term viability of the NHS pension scheme as a whole is increasingly under threat as higher-earning scheme members continue to leave.

In evidence to the NHS pay review body earlier this year, NHS Employers said: 'The current contribution design relies on high earners paying higher member contributions to subsidise those paying lower contributions. If the trend of high earners leaving the scheme continues, this may have an impact on the yield and the ongoing sustainability of the scheme.'

Meanwhile, GPonline reported earlier this year that one in three GPs had been forced to reduce their working hours or to refuse extra shifts to avoid heavy tax penalties on pensions. The BMA has said that even doctors in their 30s are being forced to cut back on work to avoid the charges.

Pension flexibilities

Last week the government announced it would consult on plans to allow senior clinicians flexibility on the amount they paid into their pension from April 2020. It also said it would introduce 'local flexibilities' this year in a bid to stop GPs and consultants from cutting sessions to avoid incurring hefty tax charges.

However, the BMA and finance experts have said it is unlikely that the changes alone would address the problem and that tax reform was necessary. The Treasury has launched a review into the tapered annual allowance and how it is impacting on public services.

One GP responding to the survey said: 'It's a mess created by the goverment. When you get GP partners in their late 30s getting worried about tapering and extra tax then something is seriously wrong. I went part-time a year ago at age 52 in part due to this pension fiasco and getting hit hard by the annual allowance changes.

'I will retire at 55 because of life-time allowance. If you asked me a few years ago before these pension changes I would probably stayed on until age 60. A lot of GPs in their early 50s are planning to quit soon or have done so and younger colleagues are stressed out by the pension changes.'

'Crippling tax rates'

The GP said that changes to NHS pensions in recent years meant that doctors were paying 'more contributions for less benefits paid in full at a much later age' - with the standard retirement age shifted to 67 or 68, compared with 60 under previous versions of the deal.

The GP added: 'Now these extra tax charges are driving a big nail in the coffin of general practice as we know it. It needs sorting now, else a cohort of GPs in their late 40s will soon be planning to leave GP-land or reduce hours rather than pay in effect crippling tax rates.'

Another GP said: 'I was heavily taxed last year as I worked full time. I have always worked part time and was unable to protect my allowance. I will not increase my commitment due to heavy tax burdens even though the practice needs me to work more.'

One GP said: 'I am part time and have been for many years but my full time colleagues are quitting, This is having a significant effect on our ability to fill roles and shifts- especially given the additional improved access and extended hours. For full time GPs this is a rapidly escalating situation.'

GPonline reported earlier this year that numbers of GPs taking early retirement had tripled in a decade as doctors faced growing pressure from pension tax.

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