Last person standing GPs 'should quit NHS pension scheme'

GP partners left as the 'last person standing' in their practice should quit the NHS pension scheme temporarily to avoid massive tax charges on pension contributions, a senior BMA official has said.

BMA Wales chair Dr David Bailey (Photo: JH Lancy)
BMA Wales chair Dr David Bailey (Photo: JH Lancy)

BMA Wales chair and Gwent GP Dr David Bailey told the association's annual representative meeting (ARM) in Belfast that doctors left as the sole remaining partner in a practice had little choice but to 'do the hokey cokey' and come out of the scheme before rejoining later.

Four in 10 primary care doctors have reduced their workload or considered doing so because of taxes on pension contributions that have left some paying £2 for every £1 earned, according to a BMA Scotland report published ahead of the conference.

Dr Bailey's comments came in response to a GP at the conference who asked for advice on GPs who found themselves left as the last person standing in a practice - a situation that can create a spike in pensionable income while they seek to fill vacancies. The GP said practices had become unviable because 'so many people have been stung with increased tax bills because they are the last person standing'.

NHS pension scheme

Dr Bailey said: 'With last person standing, I would leave the NHS pension scheme temporarily. It is almost certain you will have massive problems. Do the hokey cokey, as the consultants are saying. The only thing you can do is hop in and out of the scheme if your accountant tells you you are going to breach [the annual allowance] enormously. Lot of people leaving the scheme.'

The BMA is set to publish a pension calculator 'imminently' to help doctors evaluate whether their earnings are likely to trigger significant tax charges. But BMA pension adviser Dr Tony Goldstone warned that the early version would work only for consultants - with a version for GPs likely to become available a year later.

BMA chair Dr Chaand Nagpaul warned in his opening speech at the conference on Monday that doctors were being 'taxed out of the NHS' by pension charges.

In a series of debates at the ARM on pensions, doctors' representatives backed motions warning that restrictions on annual and lifetime allowances in the NHS pension scheme had had a 'detrimental effect on retaining doctors in clinical practice'.

Employer contribution

They warned that a rise in the employers contribution rate for pensions to 20% from April would 'inevitably reduce the impact of any increase in NHS funding'. Doctors also backed calls for an end to 'annualisation' - which can see doctors who work only a short amount of time within a calendar year forced to pay higher-rate pension contributions - and a move to a standard contribution rate for all NHS workers.

BMA pensions experts told the conference that doctors using the 'scheme pays' mechanism to cover the cost of pension tax bills could end up borrowing as much as £1m over their career to do so. They warned that under the current system, the only way doctors could control the growth of their pension pots to avoid the swingeing tax charges was to reduce work - and earnings.

Dr Goldstone told the conference: 'These punitive and ill-judged taxes are destroying our health service.' He hit out over the huge proportion of doctors forced to reduce their working hours or take early retirement, warning that the charges must be abolished.

One doctor called the tax charges 'brutal and unjust' - warnings that doctors were being forced to decide whether to reduce patient services by working fewer hours or face a huge tax bill. 'That is fundamentally wrong,' she warned.

Another doctor said the current tax on pensions were nothing less than 'theft'. He told the conference: 'It is not a generous scheme, it is fair and it is being stolen. Just because it is not a big bloke with a balaclava and a shotgun doesn’t make it any less the case that this is being stolen.'

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