• Clinicians can now set their own pension contributions so they can avoid being hit with huge tax bills
  • Changes only apply to clinical staff, but non-clinical members remain excluded such as managers
  • Government also announced review annual allowance taper

The government is proposing allowing senior doctors to set their own pension contributions alongside a review of how tax rules are impacting clinicians, in a bid to prevent doctors refusing extra NHS work. 

UPDATE: This story has been updated to clarify that the changes affect all clinicial staff, including nurses.

The Department of Health and Social Care confirmed non-clinical staff, including senior managers, would not be allowed to benefit.

Health and social care secretary Matt Hancock will also announce today that the government will scrap its current consultation, which was due to run until October, and replace it with a new consultation.

The initial consultation proposed doctors should be allowed to halve their pensions contributions in exchange for half the pension growth. Under the new plan, they will be able to set their own pension contribution so they can avoid being hit with large tax bills.

In practice this will mean setting contributions at any 10 per cent increment with the pension accrual set at the same level. Employer contributions that would have been paid to the pension will instead be recycled back into doctors’ salaries. This won’t cost the NHS more but could increase pay substantially.

The changes will come into effect from the next financial year in April 2020 although guidance will be issued to NHS trusts on how they can increase flexibility this financial year.

The government will also review the annual allowance taper which restricts the amount of tax relief available to those with a threshold income over £110,000, reducing it from £40,000 to as little as £10,000.

Mr Hancock said: “These comprehensive proposals will give doctors the pension flexibilities they have called for and need to make sure they are rewarded for extra work.”

Chancellor Sajid Javid said the government was committed to ensuring people see a “real difference in public services”.

He added: “Critical to that is introducing flexibility into the system so that our hospitals have the staff they need to deliver high-quality patient care, which is why we’ve listened to concerns and will be reviewing the operation of the tapered annual allowance.”

Concerns have been raised by trade unions and NHS leaders about how changes to pensions savings taxation are discouraging doctors from taking on extra work or influencing them to leave the health service altogether.

An HSJ investigation found a quarter of a million people opted out of the pension scheme between 2015 and 2017.

Chaand Nagpaul, British Medical Association council chair, said: “We said clearly when it launched that the earlier consultation on the 50:50 model – whereby doctors and employers halve what they put into their pension pots – was not fit-for-purpose and we are pleased that the Government has heeded the BMA’s concerns by ditching it.”


Managers still excluded from NHS pensions proposals despite rethink