NHS Doctor Pensions - For the few, not the many

[danielanthony]

I just watched a BBC news report about doctors leaving the NHS due to the fact they cannot pay any more into their pensions (£40k annual limit) and get hit with 45% Income Tax, 2% NI and a withdrawal of the personal allowance.

The BMA has warned that growing numbers of GPs and consultants are taking early retirement or cutting back on work to avoid hefty pensions taxes which make it uneconomic to continue practising. Retiring GPs often create a domino effect by leaving remaining colleagues with more work, who in turn become demoralised and quit.

https://www.anglenews.com/2019/05/3...e-gps-take-early-retirement-or-change-career/

I'm sure this problem will only get worse if Corbyn gets into power and further increases taxes on the highly paid.

So should all highly paid professionals get tax cuts (which would include NHS Doctors/Consultants) or should we make an exception for essential government employees? I think if we make an exception for NHS doctors that list will eventually be expanded to include all government workers, so it needs to be applied equally or not at all.

 

[Destination]

Most of the problem arrives not from their direct contributions, which often fall well under the 40K limit, but on the annual allowance given the rise in the 'potential pot'.
Such things tend to be mitigated in private pensions as you know the value of your pension pot.
With the change in the NHS pension scheme, older workers anyone over 40, will have 2 pots, one in the 1995 scheme and one in the 2015 scheme, and the value of both of these are added together.
The pots of course don't actually exist, nor ever will, the values assigned to them are generated, and compounded as there is 2.

I can't actually see how anyone on the highest NHS band of contributions for pension isn't going to get shafted by this annual allowance, pay 14.5% of your salary into pension, get hit with extra tax.
Some folks on the contribution band below maximum will probably get shafted also.

 

[chanjy]

Same thing with judges as well. Struggle to get new judges now as the pension was one thing that attracted them but the tax is now a problem since these measures were introduced.

 

[booyaka]

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.

 

[VincentHanna]

Not sure why Labour are being scolded for this, the Conservatives bought in the Tapered annual allowance which causes the issue.

 

[Energize]

What's stopping them paying into a private pension exactly?

The private sector workers can only contribute so much in tax revenue to prop us these cushy public pensions.

 

[ultralaser]

I'm struggling to see why this is a problem?

 

[Jokester]

I'm struggling to see why this is a problem?

Indeed, woe me, I’ve earned too much over my career. What?

99% of the population would love to be that well off. If people reach the point where they feel they might as well retire the only real solution to that is pay them less/tax them more.

 

[dowie]

What's stopping them paying into a private pension exactly?

That doesn't solve the issue being raised re: the limit, note also the comment from @booyaka re: his client too, someone working in the private sector.

 

[Energize]

That doesn't solve the issue being raised re: the limit, note also the comment from @booyaka re: his client too, someone working in the private sector.

So you mean you can't pay more than ~£1,000,000 into all pensions combined?

I don't really have a problem with this, that level of contribution is going to pay out well above the living wage so seems like a sensible limit for tax relief.

The real issue appears to be the very high tax rate the UK has in general.

 

[ivrytwr3]

His salary is around £80k so certainly not massive by any means.

Yeah, poor guy.

 

[Destination]

So you mean you can't pay more than ~£1,000,000 into all pensions combined?

I don't really have a problem with this, that level of contribution is going to pay out well above the living wage so seems like a sensible limit for tax relief..

No they can’t be worth more than 1million, it isn’t about the contributions, it is about the worth. That pound you invested 50 years ago, age 18 for an age 68 alleged retirement, is going to be worth significantly more than a pound fifty years later, yet the lifetime allowance decides to **** you up the ass over it instead.
So in a year if all those little pounds you have gathered go over the limit for that year, then you get utterly shafted.
It is a crazy situation where we stop encouraging people to plan their own futures, instead punish them, while still expecting them to make large contributions, pensions especially for an aging population are the one thing we should be encouraging, pensions are not tax free, they last as long as the person, and save us funding them in old age.

 

[FishFluff]

I don't really have a problem with this, that level of contribution is going to pay out well above the living wage so seems like a sensible limit for tax relief.

If all I can retire on is 'the living wage' then I'll have done something wrong. What's the point working hard now to get so little in retirement? Why has everything got to be a race to the bottom?

 

[Energize]

If all I can retire on is 'the living wage' then I'll have done something wrong. What's the point working hard now to get so little in retirement? Why has everything got to be a race to the bottom?

well above the living wage

Plus state pension + savings.

 

[Angilion]

If all I can retire on is 'the living wage' then I'll have done something wrong. What's the point working hard now to get so little in retirement? Why has everything got to be a race to the bottom?

I've just had a play with some pension calculators. A pension pot of £1M should generate a pension of at least £50,000 a year. "living wage" would be about £16,000 a year, assuming a 38 hour week and the government's living wage figure. An income of £50K a year is a lot more than an income of £16K a year.

Also, that £1M figure isn't a hard cap. It's just the amount at which tax relief stops. You're complaining about having only £1M tax free.

[..] So in a year if all those little pounds you have gathered go over the limit for that year, then you get utterly shafted.

Having to pay tax after the first £million is not being "utterly shafted".

 

[Pawnless Endgame]

How do I see a doctor? I had an ear infection last year on 8th Nov and the earliest appt I could get was on 24th Nov, like 2 weeks away. What use was that? Luckily my boss is a nurse, but it's the principle. My taxes go up 5%, and what do I get to show for this? No GPs and bins emptied every 3 weeks now. No evening buses.

 

[tom_nieto]

A different way of looking at this is that above a certain threshold of hours/sessions worked the employee is not getting paid to work. Why would you work that extra clinic or incentive list for nothing when you might very reasonably want to spend time with your family instead?

In a very understaffed NHS we need all hands on deck. With morale being so low, and pretty much the last decent incentive to work being removed (financial), why would anyone put in the extra time?

 

[singularity]

So where are all these doctors and consultants going then? Are they all retiring.?

I don't think the scenario outlined above is actually an issue at all, those same people would complain vehemently about nhs funding yet are happy to accept huge salaries and pensions.

Where do they think the money comes from, a magic money tree?

People on huge salaries having to pay a bit more tax on a pension pot 99% of people can only dream of is not the most pressing issue.

 

[singularity]

A different way of looking at this is that above a certain threshold of hours/sessions worked the employee is not getting paid to work. Why would you work that extra clinic or incentive list for nothing when you might very reasonably want to spend time with your family instead?

In a very understaffed NHS we need all hands on deck. With morale being so low, and pretty much the last decent incentive to work being removed (financial), why would anyone put in the extra time?

maybe because they actually have a **** instead of just money grabbing .

There are plenty of nhs workers deserving our sympathy, the most highly paid do not.

 

[Minstadave]

A different way of looking at this is that above a certain threshold of hours/sessions worked the employee is not getting paid to work. Why would you work that extra clinic or incentive list for nothing when you might very reasonably want to spend time with your family instead?

In a very understaffed NHS we need all hands on deck. With morale being so low, and pretty much the last decent incentive to work being removed (financial), why would anyone put in the extra time?

This is the real problem. Disclaimer, I'm an NHS consultant.

Currently there is little or no motivation to do work due to the tapering AA. Meaning that consultants that once did extra sessions, waiting list initiatives or went the extra mile to earn Clinical Excellence Awards have all had to stop. Colleagues are dropping PAs across the NHS.

The system penalises the most experienced doctors from doing over the bear minimum. That's great for work life balance but now you need a load more consultants that dont exist.

Personally I'm worried as having recently gone upto a consultant post my nebulous pension pot will growth well above the AA that once I've burnt through my carry over I'll be looking at a 5 figure tax bill for money I won't see for another 30 odd years. The hardest thing is as you have multiple pots it seems extremely difficult to accurately predict growth.