NHS Doctor Pensions - For the few, not the many

[danielanthony]

https://www.thetimes.co.uk/edition/news/doctors-blame-tax-for-longer-waiting-lists-fkzfwgtkg

This has also been on BBC news again today, blaming longer waiting lists on the pensions tax.

Hopefully the government will go back to the original contribution limits (~£255k) and it wont be an issue for anyone, but we will have to cut something else to pay for it (HS2, Trident?)

 

[casaubond]

it is a miscalculation from the treasury, they underestimated how much they rely on doctors doing extrashift this and the politics of envy of course as this problems only occurs to those doctors earning more than 110K . per year.

As so many here said it before.. they have hard time to fell sorry for someone earning this amount of money, well my answer is .. please come and join us don't just be envious if you think it is easily done , UK has a shortage of Doctors, we will be more than happy to receive anyone in our ranks once you have sorted our 5 years undergraduate study and 5 years postgraduate training...

The issue is not paying taxes for the money earned, everyone understands and accepts this is paying taxes twice for virtual money ..to be more clear, on a 110k salary one pays 14.5% pension which is aprox 16k. Then after deducting 16k from the initial 110k from the rest one pays taxes as per rules... till now all good and clear, everyone accepts this in a normal society
Now the NHS pensions are doing something clever , they ''dynamise'' thouse 16k - which means they multiply them by a coefficient (depending on your age and length of service) and arrive at a sum , usually 40-70 k . These are virtual money, money that no one see them and added in your pension pot with a promise to see these money later (but if you die before the pension age-68 then unlucky you will never see them). Now here is the trick , these 40-70K are part of your annual allowance, initially everything above 40k would be takes but now the Gov reduced the limit to 10k. Everything above 10 k will be takes at the highest rate of tax.

So in conclusion a doctor who earns £110.001 per year will pay 16K in pensions then rest is taxed. After that , from the rest will pay another tax at the highest rate from 30-60K virtual money - effectively double taxation.
Thus explaining why they effectively pay to work .

Simple solution - allow NHS worker to choose how much from their income to be pensioned - (at the moment all your NHS income is automatically pensionable , no question asked). Less taxes now , smaller pension in the future but the decision will be with the individual not the state

 

[Minstadave]

as this problems only occurs to those doctors earning more than 110K . per year.

This isn't true, the taper can kick in above 110K but you can easily breach the 40K AA and be earning under 110K.

 

[danielanthony]

Simple solution - allow NHS worker to choose how much from their income to be pensioned - (at the moment all your NHS income is automatically pensionable , no question asked). Less taxes now , smaller pension in the future but the decision wi with individual not the state

The problem is that the tax current doctors are paying is funding the pensions of doctors who have already retired - its a massive public sector pyramid scheme.

Defined Contribution schemes give you more control and no surprise tax bills, but result in lower pensions with no guarantee of value due to their dependency on stock market performance - this is the type of pension found in the private sector.

 

[Kemik]

So in conclusion a doctor who earns £110.001 per year will pay 16K in pensions then rest is taxed. After that , from the rest will pay another tax at the highest rate from 30-60K virtual money - effectively double taxation.
Thus explaining why they effectively pay to work .

Not quite as simple as that. The tapering only comes in above £150k adjusted taxable income (inc employer contributions). It reduces the allowance from £40k pa by £1 for every £2 earned. It also only applies if threshold income (i.e. after deducting pension contributions) is above £110k.

 

[Fine]

At the end of the day the 40k is pretty daft but, they get a lot of cash and they'll have a very good pension come what may.

I think the working practices are the problem, need to modernize

 

[Destination]

This isn't true, the taper can kick in above 110K but you can easily breach the 40K AA and be earning under 110K.

Yes with the new split scheme my past two years I have breached the 40k allowance, yet had taxable earnings of 54k or so, and a pension contribution of 16k.
The pot calculation is madness when it is applied to 2 pots for the 1995 and 2015 schemes.

 

[casaubond]

Not quite as simple as that. The tapering only comes in above £150k adjusted taxable income (inc employer contributions). It reduces the allowance from £40k pa by £1 for every £2 earned. It also only applies if threshold income (i.e. after deducting pension contributions) is above £110k.

true... also AA is 10K from this year

 

[Buddy]

Yes with the new split scheme my past two years I have breached the 40k allowance, yet had taxable earnings of 54k or so, and a pension contribution of 16k.
The pot calculation is madness when it is applied to 2 pots for the 1995 and 2015 schemes.

Out of curiosity what have you decided to do. Dip in and out?

 

[Destination]

I don’t know yet, my current overrun was in a small order, so I could make use of previous years allowance to make up for the deficit.
Worse as I am an independant contractor to NHS services, I am not sure if dipping will work.
So this year will be the telling point.
The worst of it is, the financial year is over, by several months.
I know roughly what my contributions have been, but frankly I have no way to calculate to know what the pension people will think my annual allowance or annual pot expansion is.
Last year I didn’t find out until they sent two letter in October, late October, if the muppets wait that long again, my taxes will likely have already been submitted.

It is frightening how poorly they are running this **** show.
Ah so you’ve a sore tooth sir, well tell you what, get back to me in October or maybe a bit after, and Ikll tell you if I can be arsed to take the tax hit taking it out on the NHS for you, after all in Northern Ireland the NHS fee for a routinue extraction is about £15.
Utter madness, poatients are the ones suffering.

 

[Mason-]

its a massive public sector pyramid scheme.

All state benefits are population based pyramid schemes.

 

[The_Abyss]

Matt Hancock has committed that this will be resolved by the end of this current tax year, and that partial pension funding will not be part of the solution.

All good, except that he may not be in government in a few days' time...

 

[Minstadave]

Matt Hancock has committed that this will be resolved by the end of this current tax year, and that partial pension funding will not be part of the solution.

All good, except that he may not be in government in a few days' time...

At least they've given up the stupid 50:50 idea.

 

[The_Abyss]

Indeed, that one was going nowhere. The solution also needs to be holistic for defined benefit pensions and independent of any one group of workers, if for nothing more than to prevent mass strikes any all other affect public sector workers.

 

[Psycho Sonny]

As above - not really even the annual allowance which is the problem - it's the lifetime allowance which is the issue. It's been steadily cut from £1.8 million to £1million last year (£1.055 million this year)

I have a client who works for EDF energy in a middle/high management position - he's 58 years old - worked there since he was 20.....His pension pot is currently valued at £1.4 million. Way over the current lifetime limit.

His salary is around £80k so certainly not massive by any means. He technically has another 7 years to work but it's almost certainly pointless to do so in terms of his pension situation as anything he accrues from here will cause even more tax issues down the line.

It's set at a ridiculously low level and will catch a lot of people out who have benefited from DB/Final salary schemes over the years.....Most people don't even know they have any issues - Scheme trustees don't bother telling people they have an issue - usually falls to the individual to find out.

Why doesn't he just stop contributing into his pension then?

Also having £1.4 million sitting there I'm not sure why he even cares. If he was to withdraw a chunk of that (even after tax) he could easily invest in something which his family can keep forever and net them thousands in rent every month.

 

[itsallaboutyou]

Career average pensions are going to cost the government a fortune in remedy claims. It's already been ruled for the Fire Brigades Union and Judges pensions are unlawful and discriminatory on the grounds of age. The BMA are pursuing a similar claim, as are Police Officers (albeit without any support of the Police Federation).

I would proffer that there will be news prior to the July recess for parliament.

 

[gary996]

Couldnt you as a doctor be a ltd company and just be payed dividends.
Footballers set up businesses for tax reasons

 

[toasteh]

Couldnt you as a doctor be a ltd company and just be payed dividends.
Footballers set up businesses for tax reasons

Yes, and a lot of doctors are incorporating their private practice work to try and stay below the threshold at which the annual allowance starts to taper.

 

[Minstadave]

Couldnt you as a doctor be a ltd company and just be payed dividends.
Footballers set up businesses for tax reasons

Not normally no. Trusts wont pay you as a private company.

 

[Deus Ex]

At the end of the day the 40k is pretty daft but, they get a lot of cash and they'll have a very good pension come what may.

I think the working practices are the problem, need to modernize

Consultants may get paid relatively well (15+ years after starting med school), juniors dont. I make £17/hour now during normal working hours now that Im back in training, I made £50/hr as a locum. Our wages are artificially suppressed. Look at Australian, NZ, Canadian and US wages and then see what ours are.

Who is going to sacrifice their personal life to do hours over 48 to effectively make no real monetary gain?

Also pray do tell how you would modernise. If you have any good ideas I might try and push them as a quality improvement project so you'd be helping my career out.