Pension News update from Cavendish Medical

06 January 2020

We have seen many unprecedented changes to the pensions landscape in the last decade but even we were surprised by the unexpected announcement from health secretary Matt Hancock in November.

In a desperate bid to ease the current workforce crisis, the government announced it would pay the tax bills of NHS staff caught out by changes to pension contribution limits for the current tax year only. This move comes after HMRC announced record revenue from ‘annual allowance’ breaches of £812m in 2017-2018.

The new emergency measure, which only applies to clinical staff, will allow NHS staff to opt for ‘Scheme Pays’ to cover their excess charges. They will then be compensated by the NHS before they retire.

Many doctors have expressed concern about trusting a contract which will not be truly challenged until they have retired – possibly several decades away – but NHS England has clarified that the contract to repay the tax charge will be legally binding.

This temporary measure could come as a relief to doctors facing punitive tax bills in the short-term – although there are several grey areas which could prove challenging. For example, the tax will be covered only on charges arising from excess contributions to NHS pensions – not on personal pensions. There are also locally-agreed Trust policies which will impact pensions and tax positions at an individual level.

We are also still awaiting further details on the consultation into pension flexibility launched in the summer of 2019.

If you are in any doubt about your own position, you should seek help from advisers with knowledge of the NHS remuneration and pensions package.

www.cavendishmedical.com

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