“The British Medical Association (BMA) have thrown more fuel on the already blazing debate surrounding doctors pensions this morning, when it warned the chancellor of the exchequer, Philip Hammond, that doctors will start reduce their NHS working hours unless tangible reforms are made to the NHS pension scheme.
“The annual and lifetime allowance on pension saving have been reduced radically in the past decade, depriving savers of the opportunity to set money aside for later life. For those that are maximising their allowances, they can be penalised with harsh tax penalties and may end up in a worse financial position as a result. That is a perverse disincentive to save for the future.
“Most schemes and employers have the flexibility to opt out and use other tax advantages savings vehicles once the pension is maxed out. This allows people to plan their affairs properly with the help of an adviser. But in the case of the NHS scheme, reducing contributions isn’t possible so employees are locked in to a tax charge unless they stop accruing money, which means stopping working.
“That cannot be the right outcome for anyone, least of all the staff and patients of the NHS. When a complex area of savings taxation is impacting on vital front line services, something has gone badly wrong. This is really putting pension rules, a subject which most people know little about, right into the heart of a key discussion about the health service. Hopefully it will raise awareness of the backwards steps that have been made in savings tax reforms in recent years and force a rounded discussion about how this impacts on behaviours. For too long government have focussed only on cutting the cost of tax incentives, rather than the effect this has on our working lives and savings patterns.
“It will be interesting to see whether this debate will also cause there to be wider implications which impact there entire public sector. Could these problems lead to high ranking member of the armed forces such as Generals or High Court judges also seek to reduce their hours? These public sector pension issues could have far reaching implications on not only the health of Britain but also its defence and ability to maintain law and order. “