• Government consulting on 50:50 pensions contribution option
  • DHSC, rather than Exchequer, will cover costs of changes to NHS pension rules
  • Government says changes will enable senior doctors to “freely” take on additional work

The government is to consult on changes to the NHS pension scheme rules to stop senior doctors being hit with large tax bills.

The Department of Health and Social Care said this morning it was consulting on new plans which would give senior clinicians more flexibility over the rate their pension builds and allow them to “freely take on additional shifts to reduce waiting lists, fill rota gaps or take on further supervisory responsibilities”.

In particular, the department said it would consult on a proposal known as the 50:50 option, which would allow clinicians to halve their pensions contributions in exchange for halving the rate of pension growth.

The DHSC confirmed the consultation on the 50:50 option would run for 12 weeks and should launch at the end of this month**. It also said it would listen carefully to the profession to reach a final proposition that works for both staff and tax payers.*

Since 2016, the annual allowance taper has restricted the amount of tax relief available to those with a threshold income over £110,000, reducing it from £40,000 to £10,000. Concerns have been raised the effect of the rules was discouraging doctors from taking on extra work or influencing them to leave the health service altogether. 

Health and social care secretary Matt Hancock said: “We have listened to the concerns of hardworking staff across the country and are determined to find a solution that better supports our senior clinicians so we can continue to attract and keep the best people.

“The reforms we are setting out today will give clinicians greater flexibility to manage their pensions, have more control over their future, and offer a deal that’s fair to doctors, taxpayers, and the patients they care for.”

The DHSC said it will ensure appropriate funding is provided to the Treasury to cover costs.

The government added it will continue to “examine the evidence” on how this specific issue affects other public sector workers.

The British Medical Association wrote to Mr Hancock last week warning the 50:50 option would not provide the flexibility needed. Instead, it argued doctors needed “a range of options and mitigation for excessive annual allowance charges”.

Responding to today’s news Tony Goldstone, a consultant radiologist at Hull and East Yorkshire Hospitals, said: “50:50 is a paycut, and it is bound to fail. It is completely unsuitable for those caught by annual allowance issues.

“The employer contribution is part of the total reward package, and it should not be for DHSC nor employers to access this if hard working clinicians and managers are forced out of the scheme by ill-conceived and unfair punitive taxes.”

Dr Goldstone added: “It will continue to leave staff paying too much tax in some years (and therefore continuing to decline additional work and leadership roles) and will allow insufficient pension accrual in others.

”I am worried that [the government has] not grasped the scale of this problem, and has not thought out properly the consequences of this so-called solution. It is of grave concern that patients will continue to suffer as NHS capacity is already severely overstretched.”

HSJ reported last month the BMA had told consultants they could get a higher pension by cutting their hours, which it warned could result in a significant workforce crisis.

HSJ amended the article at 13:18 to reflect the government is consulting on one proposal and this consultation will run for 12 weeks. 

** HSJ amended the article at 15:53 to reflect that the consultation should be launched this month.