BMA warns Government about budget changes to pensions – BMA media center

The BMA warns that negative changes to pensions taxation in next week’s Budget would harm the Government’s chances of fulfilling its promise to reduce NHS waiting lists.

In a letter to the Chancellor¹The chair of the BMA’s pensions committee says punitive changes would stop doctors taking on additional work, force them to reduce their workload or, in the worst case, leave the NHS altogether.

The BMA requests assurances from the Government that it will:

• Do not reduce tax-free pension benefits;
• Do not reintroduce the lifetime allowance;
• Do not introduce a flat tax reduction on pension contributions;
• At least index the annual allowance cap to inflation and provide a solution to the ill-conceived annual allowance phase-down².

The BMA claims that reducing the fixed tax-free pension allowance would cause a large number of doctors to retire immediately, lest they be hit with huge tax bills they had not planned for. According to NHS data, more than 22% of the consultancy workforce in England is aged between 55 and 64, many of whom are eligible for early retirement.

The reduced annual allowance, which determines how much a person’s pension can hypothetically grow before being subject to further tax, can trigger additional charges of up to £22,500 as a result of just £1 of additional earnings.

In his letter to Chancellor Rachel Reeves, BMA pensions committee chair Dr Vishal Sharma said:

“The Government has committed to reducing record waiting lists through an additional 40,000 appointments per week, but the wrong changes to pension taxation could completely derail these plans before they have even started. As we have already highlighted, the reduced annual allowance is already hampering senior doctors’ ability to take on additional work, but some of the potential changes being suggested could result in doctors retiring on an unprecedented scale.

“After many years in which doctors have had little option but to take action, such as reducing their workload or leaving the NHS altogether, to mitigate the disproportionate impact of pensions tax policy, the last thing the NHS needs is of more harmful changes.”

Dr Sharma also warns of the unintended consequences of national insurance increases for the NHS as an employer, whether these are increases in the employers’ national insurance rate or the subjection of employers’ pension contributions to national insurance charges.

He says the Treasury would need to meet these costs or the NHS – including GP practices – would need to be exempt.

“GP practices are already under immense financial pressures – charging additional costs could likely cause even more practices to close,” he says.

Dr Sharma adds: “I would again ask you to consider these points, along with our wider BMA submission to the budget consultation, as you finalize the next budget. The wrong changes could have irreparable damage to the NHS and the Government’s ambitions to improve patient waiting times.”

Ends