“It is clear from this guidance for NHS employees that the tapered annual allowance (TAA) has caused huge amount of complexity for front line staff. It addresses the maze of options confronting them to help mitigate any tax bill, but it should not have come to this. Pensions must be made easy to understand if we are to fill any of the savings gap, but this paper shows just how complicated it can get for someone who likely finds themselves unexpectedly stuck in a tax trap and unsure which way to turn. Some of the measures being adopted by doctors could later be deemed by the taxman as an avoidance scheme. This could end up with even worse publicity for pensions if doctors are later challenged by the taxman.
“It needs to be made a lot easier than this for public sector workers to navigate their pension savings, but constant Treasury tinkering has resulted in a tax system that is contradictory and is punishing those who least deserve it.
“It is unknown how successful recent government proposals will be, but these are ultimately quick fixes. The best long-term solution is to scrap the taper, making pensions universally applicable and encourage saving, rather than the complete opposite. NHS staff are not the only ones impacted by the TAA and as such the government needs to have a more permanent solution proposed in order to prevent the wide spread staffing issues becoming systemic across the whole of the public sector.
“That being said, it is important that people are not disincentivsed to save for their retirement, so it is positive that the NHS is attempting to engage with staff over the issues. It is likely that other public sector employers, such as the Ministry of Defence and the Judiciary, will need to do the same. It is reassuring that the NHS is encouraging staff to seek professional financial advice from the outset, highlighting the value that this provides to someone who is suffering from the hands of the TAA.”