IT IS just a month since the UK Government vowed to consult on a pension issue that has triggered a staffing crisis in the NHS and, despite everything that has gone on in Westminster since, it has been as good as its word.

In a document released by the Department of Health and Social Care this week, the Government conceded that rules that were supposed to stop higher earners gaining too big a benefit from pension-related tax breaks had instead resulted in senior doctors shunning extra work.

“The Government recognises that the interaction between the NHS pension scheme and the pensions tax regime is driving a behavioural response from NHS clinicians to reduce their work commitments,” it said, adding that it had “listened to concerns that this behavioural response is, in turn, impacting on frontline NHS service delivery and patient care”.

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The biggest problem is that extra shifts are tipping some people over the £110,000 tapered annual allowance for tax-free savings. That in turn gradually reduces the amount that can be saved into the NHS pension from £40,000 to £10,000 while breaching those limits results in disproportionately high tax bills.

As reported in The Herald this week, Borders General Hospital paediatrician Dr Graeme Eunson, who has just taken over as chair of the British Medical Association’s (BMA) Scottish consultants’ committee, said he had found himself in the “bizarre situation” of being able to substantially increase his take-home pay by working fewer hours.

The problems are being caused in part because senior doctors, who regularly take on extra shifts to help clear waiting list backlogs, have no certainty over how the overtime will impact on their total annual earnings, meaning the earnings limit can easily be inadvertently breached.

At the same time, pension rules do not allow those affected to reduce the amount they save into their pension, with the choice being to either pay in a fixed proportion of base salary to receive a similar employer contribution or to opt out and lose the employer's payment.

To address the issue the Government is proposing measures such as allowing senior clinicians to reduce their contribution level at the start of the year by increments of 10 per cent with the ability to dial it back up later in the year when they have a clearer sight of their earnings.

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However, as this could result in doctors receiving a lower employer contribution overall the BMA has warned that the Government’s solution would ultimately result in many doctors taking a pay cut, with the deputy co-chair of its consultant committee Dr Phil De Warren-Penny reiterating the trade union’s position that the only solution to the problem is to remove the taper altogether.

“The real heart of the problem is the tapered annual allowance, which must be removed along with the annual allowance and lifetime allowance,” he said.

“Only when these are removed can doctors return to working extra shifts to help remove waiting list backlogs and support colleagues where there are rota gaps, without fear of receiving huge tax bills.”

For Ian Browne, pensions expert at financial services business Quilter, the bigger difficulty with the consultation is that it aims to solve the issue for senior doctors only, when the problem with the tapered annual allowance is having an impact across the public sector.

Indeed, as revealed by last month, 3,840 members of the Armed Forces Pension Scheme breached their annual tax-free savings limit in 2017/18, with the chief executive of the Forces Pension Society, Major General Neil Marshall, noting that the fear of being hit by disproportionate charges is starting to have an impact on the career decisions being taken by those working for the British Army, Royal Navy and Royal Airforce.

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Mr Browne said that the Government “has not yet acknowledged that the same challenges are facing other sectors in just the same way,” adding that even if the proposals in the NHS consultation “have merit they fail to address the fact that the taper is wreaking havoc across the whole public sector”.

Like the BMA, he believes that unless the taper is scrapped altogether public sector workers will continue to take matters into their own hands, protecting their personal financial position by shunning extra work and promotions.

“Rather than fiddle around trying to find workarounds for this growing problem the Government should be looking to scrap the taper altogether as this is quite clearly the root cause of the problem,” he said. “In one fell swoop you could alleviate this pension problem threatening the public sector.”