Scottish health secretary demands ‘decisive action’ on NHS pensions

James Phillips reports...

Scottish health secretary Jeane Freeman has written to Chancellor Sajid Javid demanding he find a solution for heavily-taxed senior NHS workers in his upcoming Budget.

The “serious impact” of the tapered annual allowance is causing Scottish NHS clinicians to “make unanticipated changes to their working commitments to avoid large and unexpected tax charges”, she wrote.

The issue of the tapered allowance – which reduces the annual allowance by £1 for every £2 earned over £150,000 – has caused doctors across the UK to drop work and overtime in order to avoid bills.

The government is currently holding a review of the issue, with its findings expected to be included in the Budget.

In the meantime, the Scottish government introduced a temporary measure last November to allow NHS members of staff to opt into an employer contribution recycling scheme. Affected members must demonstrate they have a “reasonable expectation” of exceeding the annual allowance.

While Freeman said further action would be taken if needed when the policy expires at the end of March, she added a “permanent solution is urgently required”.

She wrote: “The rules around annual allowances and lifetime allowances, together with the taper, continue to have a serious impact on NHS service delivery and staff, with clinicians across the NHS having to make unanticipated changes to their working commitments to avoid large and unexpected tax charges related to pension savings.

“These impact the ability to deliver and maintain front line services, and on the sense of value of our staff.”

Freeman said “considerable effort has been expended to date in trying to offset the very real consequences for NHS staff”.

“It is however clear that a permanent solution is urgently required, and can only be offered by [HM Treasury]. It is incumbent upon you to take the opportunity of the March Budget to fully and finally remedy the situation, and allow our NHS staff to get on with delivering care without fear of the consequences. These concerns are echoed across the entire UK, and I urge you to act.”

One solution reportedly under consideration is to raise the threshold of the tapered annual allowance from £110,000 to £150,000.