NHS England confirms 'exceptional action' to settle pension tax crisis for 2019/20

NHS England has promised a 'contractually binding commitment' to pay off doctors' pension tax bills for 2019/20 - and told doctors fearing punitive charges they can 'immediately' take on extra shifts or sessions.

NHS England chief executive Simon Stevens (Photo: Alex Deverill)
NHS England chief executive Simon Stevens (Photo: Alex Deverill)

In a letter to the BMA and other organisations NHS England chief executive Simon Stevens recognised that officials had 'heard loud and clear from NHS staff that pensions tax rules are impacting upon staff who want to do the right thing by patients'.

The NHS chief executive said there was 'an urgent operational requirement to tackle the problem in the NHS', adding that 'NHS England and NHS Improvement have decided to take exceptional action'.

Under plans put forward by NHS England doctors in the NHS pension scheme who 'face a tax charge in respect of work undertaken this year (2019/20) as a result of breaching their annual pension allowance will be able to defer this charge'.

NHS pensions

Doctors can choose to pay off the charges through the 'scheme pays' mechanism - and NHS England will make 'a contractually binding commitment to pay them a corresponding amount on retirement, ensuring that they are fully compensated in retirement for the effect of the 2019/20 scheme pays deduction on their income from the NHS pension scheme in retirement'.

Mr Stevens confirmed the scheme would be funded nationally 'at no net cost to trusts or CCGs' - adding: 'Clinicians are therefore now immediately able to take on additional shifts or sessions without worrying about an annual allowance charge on their pension for 2019/20.'

The announcement comes just days after reports that a proposal for a short-term solution to the pension tax issue, which has devastated the NHS workforce, was imminent.

GPonline reported earlier this year nearly all GPs in some parts of England had reduced or planned to reduce work over fears that punitive pension tax charges would exceed any income they would earn from extra work.

Short-term solution

The interim solution put forward by NHS England has been endorsed by health and social care secretary Matt Hancock. In a letter to Mr Stevens, he wrote: 'The government has already accepted the overall case that pension taxation arrangements are a unique problem for NHS clinicians.

'I have carefully considered your advice and accept your judgment that it is operationally necessary and urgent to take further action on clinicians’ pensions to protect patient care over winter. I accept your judgment too that this cannot wait until after the general election, and on that basis I am advised that its announcement is compatible with pre-election guidance.'

BMA chair Dr Chaand Nagpaul said earlier this week: 'The BMA has been in active discussion with NHS England about what short-term options, including this interim measure, could be implemented to allow doctors to resume additional work over the coming winter period.

'These proposals under discussion could, if properly implemented, provide the respite needed to enable significant numbers of doctors to increase the work they are doing, giving vital patient care at a time of unprecedented demand.

NHS England has published FAQs on the proposals on its website. The letter from Simon Stevens confirms that in general it would be for the government to 'make judgments on wider issues of pension tax design and incentives, and their equitable application'.

But he added that the urgent operational requirement to tackle the problem in the NHS' had forced NHS England and Improvement 'to take exceptional action'.

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