Dr Tony Goldstone Profile picture
Nov 27, 2021 33 tweets 13 min read Read on X
1/33 Retirement age in the NHS & Pension Tax 🧵 - FACT vs FICTION

This is a *really* important thread. Its complicated, please read ALL carefully & share/RT

The graphic below is meant to describe the same doctor, one is (I believe) completely incorrect. Read on find out which Image
2/33 As @TheBMA @BMA_Pensions & others have said, its crucially important we RETAIN the senior experienced workforce. There are a number of important levers to do this, including pay, pensions & pension taxation. My thoughts on how to do this below Image
3/33 Government are rightly looking at ways to encourage this too... but I thought I would fact check some of the figures they have stated on "late retirement", & make some helpful suggestions for their new website.

england.nhs.uk/looking-after-… Image
4/33 They've selected an "edge case", a consultant who is sat just below the LTA (conveniently the numbers they have used show a case affected by LTA but not AA, but more of that later). Their central claim is that it makes financial sense to carry on working past retirement age. Image
5/33 I think the methodology they have used is flawed (I know they got external actuarial advice on this but here are my thoughts). Their key finding & assumptions are here 👇

If the numbers don't interest you, feel free to skip to my 5 suggestions at the end of the thread ImageImage
6/33 I've recreated their claimed numbers (left) & in the interest of transparency I have shown my working. Thanks to @gdcuk for cross checking & agreeing my maths.

Below are the reasons why I think their claimed numbers (i.e. a higher pension of £1676/yr DESPITE LTA) are wrong ImageImage
7/33 i) The numbers assume if a member delays retirement by 1 year they can get an extra year in 1995. This is incorrect- due to McCloud/remedy, anyone who is NOW delaying retirement will get any new accrual in 2015 (post April 2022) & with that a new later normal pension age
8/33 ii) They have assumed inflation and pay growth are both 2%. History tells a different story with pay less than inflation (more on this below)

iii) Even if we ignore i/ii for now, they have calculated the comparison incorrectly.
9/33 They have shown the effect of inflation on PAY affecting final salary pension by delaying retirement, but ignored the fact that pension would also have been inflated by retiring at 60 (see blue correction) Image
10/33 So I agree (see calculation) that the consultant would have £46,630 pension (no LTA) going at 60, and agree the pension would be £48,306 at age 61.
11/33 But its *not* correct to say its £1,676 more pension, because that same pension of £46,630 would have inflated to £47,563 by age 61.

And of course by not retiring @ 60 the consultant has literally burned £46,630 in pension they would have been paid at 60. Working attached. Image
12/33 Although less relevant for doctors, the've made the same mistake in a band 7 nurse example. Not as bad as the doctor example (as no LTA), but they have overstated the benefit of working to 65, because they failed to inflate the pension had the person retired at 60 @theRCN ImageImage
13/33 If nothing else this shows another crucial point. COMPLEXITY. The largest DB pension scheme in the UK, with paid professional actuarial advice, can get it wrong. I'm not trying to embarrass anyone, & I can cite many examples of professional advisors, HMRC, Image
14/33 the people that write tax exams etc getting it wrong too. The point is that it's too complicated for anyone to navigate. Could YOU work this out, & could YOUR ADVISOR do it *correctly*?
15/33 Enough moaning about the figures, what do I & @TheBMA think the govmnt needs to do if they want to really​ improve retention & encourage people to stay beyond 60. Lots of people will get 7 more years in 1995 thanks to McCloud which will focus minds. Govmnt need to act NOW. Image
16/33 .
1️⃣ FIX PAY- your final salary pension (consultants not GPs) is linked to your pay. In real terms, your pay has gone down circa 30% in a decade. The longer you wait till retirement, you risk further sub-inflationary pay cuts being baked into your pension. Image
17/33 For example, in the consultant example above they have assumed both pay and inflation are both 2%. I politely suggest, based on history (& COVID) it might be more realistic to assume inflation were 3% & pay awards 1% (i.e. another disgraceful below inflation pay cut).
18/33 Lets redo the government example using 3% inflation/1% pay award (using their methodology, which Im not a fan of noting the above). Retire at 60 at your pension increases with inflation. Or stay working & get more cuts to pay (baked into pension). See where this is going? Image
19/33 Now by staying on at 60, breach LTA & even without AA your pension goes down! Not only do you burn £46.6k pension you would have earned, you pay another £14.7k in contributions to get a lower pension. You can invest your lump sum & watch that grow too. You've been warned! Image
20/33 .
2️⃣ FIX PENSIONS. There's a serious anomaly in the 1995 section. You have been paying into the pension assuming you draw pension at 60. If you don't retire at 60, under current rules you are BURNING pension.
21/33 Yes the final salary link remains, but you should get an ACTUARIALLY INCREASED pension if you retire later. Thats the exact opposite of the 4-5% year reduction you get by going early. Not only is this fair, it is exactly what happens in the 2008 and 2015 sections👇. Image
22/33 Go later than 60 and you are burning pension unless they introduce "late retirement factors". You have been warned!
23/33 .
3️⃣ FIX PENSION TAX. You might have noticed the @NHSEngland example addresses LTA alone & conveniently ignores AA.
24/33 If you are affected by BOTH AA & LTA it *seriously*​ reduces the value of your pension & may make it extremely marginal if you should stay in the scheme / carry on working.
25/33 Government knew this was a problem for judges, who had similar recruitment / retention issues - they fixed it with a tax unregistered scheme. They could do the same for doctors / other high earners in the scheme. Do your sums! You have been warned. Image
26/33 .
4️⃣ Remember your advisor doesn't have a crystal ball & can only advise about CURRENT tax rules. These rules are ALREADY​ devastating the workforce & causing early retirement. The only thing you do have is knowledge of past performance by the government.
27/33 Look at the graphs showing (in real terms correct for inflation) the LTA, (AA is similar). If government don't fix this, & those graphs don't suggest they are in a hurry to fix it, there is a very real risk they will get even worse. You have been warned. Image
28/33 .
5️⃣ Doctors are not unique & other high earners have solved this with recycling. If you can't give pension due to punitive taxation, give pay instead. At the moment relatively few NHS employers do this, or do it differently. Image
29/33

The NHS (in all 4 nations) could overnight​, should they wish to, give you the *FULL*​ employers contribution (i.e. 20.6% not 14.3%, less employers NI) at no additional cost to the taxpayer.
30/33

As @TheBMA have been asking for a couple of years, this needs to be *centrally mandated*, & uniform, not least so employees affected by AA/LTA (& their advisor) understand this. Image
31/33

There you have it @sajidjavid @RishiSunak @Jeremy_Hunt. If you haven't already, please read this entire thread carefully. I believe there is an existential threat to the NHS. @NHSMillion
32/33

To summarise #saveournhs
1️⃣ FIX PAY - down 30% in a decade
2️⃣ FIX PENSIONS - late retirement factors
3️⃣ FIX PENSION TAX - like you have for judges
4️⃣ Do your sums / understand this
5️⃣ Full & mandated central ♻️ is a quick win at no extra cost to taxpayer
33/33

If you really​ want to fix retention (& you *really*​ need to), we don't need smoke & mirrors about the value of your pension for staying, we need an honest conversation about the 5 points above which can solve this existential crisis.

Please share widely / RT / Quote RT Image

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More from @goldstone_tony

Mar 29
1/ NEW & IMPORTANT: LOTS of new data this week incl new pay data 28/3/24 👇 NEW charts incl NHS satisfaction (SPOILER: Its grim #MindTheGap)

MUST fix pay/retention to fix #WaitingLists- next GE WILL be won/lost on NHS.

Please read whole [long bumper] 🐇🧵 & share widely/RT

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2/ You'll notice when ministers are in the media, they often talk about how hard "your viewers/listeners" have been hit by inflation. But what we need to do is separate fact from fiction (aka LIES), it was 👇excellent @jburnmurdoch @FT chart that really showed this well last year Image
@jburnmurdoch @FT 3/ But its not just government ministers gaslighting NHS workers that they have no right for their pay to keep up (like everyone else's), it was also so-called "independent" DDRB👇

Apparently doctors & dentists should not be protected when "its not taking place in other groups" Image
Read 35 tweets
Feb 24
1/ *VERY* concerned about the quality & type of information coming to @BMA_Pensions members to allow them to make choices in regards to McCloud.

For members who chose to move to 2008 (so called "choice 2", we saw the first of this information last week - deep dive 🧵
Pls RT

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2/ OK first of all, lets rewind. Pre 2008 we were all in the 1995 section. For most members that had a fixed retirement age of 60, and gave us "80ths" of final salary. Work 40 years, get 40/80ths or 1/2 of your final salary. Simple. Back in the day contributions were 5% or 6%
3/ As we all started to live longer, government felt this was unnafordable as we were spending longer in retirement. So they introduced the 2008 scheme
- 1/60th not 1/80ths
- Retire at 65 not 60
- So called "Reckonable" pay - based on best of 3yr in last 10, inflation adjusted
Read 30 tweets
Feb 22
1/ NEW: Consultation response out & confirmaiton of rates 1st April '24 , dropping the 13.5% tier.

Grateful government listened to concerns about feezing the top tier so tiers WILL uplift with CPI, not creating (another) "fiscal drag" for higher earners

gov.uk/government/con…
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2/ This repesents a change from previously announced where tiers were to be uplifts of AFC awards (largest employee group). I had suggested a "double lock" of greater of CPI or announced awards, which was supported by the scheme board, but sadly rejected by government Image
3/ @BMA_Pensions again raised concerns that the @nhs_pensions has a higher contribution rate than many public sector schemes, and has the steepest structure.
We continue believe it should be much flatter, or flat, in a CARE scheme will all paying the same for the same £1 pension Image
Read 6 tweets
Jan 15
1/ NEW & BREAKING: @instituteforgov supported in analysis by @CIPFA issue an UPDATED pay erosion chart for NHS workers including @TheBMA doctors & @theRCN nurses👇

WHY is this so relevant: This now includes pay data released in '24 to Sept '23 INCLUDING 6/12 of 23/24 pay awads
2/ This crucially important 📉shows

- pay erosion in NHS from austerity
- uses CPI preferred by gvmnt & some economists
- crucially shows 6/12 effect of DDRB 23/24- starting basis for all pay deals (i.e. not a lot) Image
@RobLaurensonD4P @_VivekTrivedi @TheBMA @BMA_Consultants @BMA_JuniorDocs @Doctors_Vote 3/ So this chart uses the latest available data (released in 2024) includes the latest pay deals

Despite this @BMA_JuniorDocs down a STAGGERING 25.0% in real terms

REMEMBER: This is using CPI, not RPI, which would produce a higher figure (RPI includes mortgage interest etc) Image
Read 11 tweets
Jan 7
1/ *Deeply* worrying from @RishiSunak @10DowningStreet on @bbclaurak

Watch the clip in full 👇and pick out the blatant untruths - its so unbelievable they went unchallenged Laura K?

Apparently "The government has now reached resolution with every other part of the NHS. ....
2/ "Nurses, midwives, paramedics, consultant doctors, specialty doctors most recently. "
"So EVERY other part of the NHS workforce, and I'm grateful to them for everything they're doing, has reached a resolution with the government on a reasonable, fair pay settlement. "
3/ According to our PM

"The only people that haven't are the junior doctors."

How can this go unchallanged?

To be clear @BMA_Consultants (nor @BMA_SAS) have *NOT* "reached a resolution with government on a "reasonable, fair pay settlement"

This is simply NOT true
Read 15 tweets
Jan 5
1/ NEW & IMPORTANT: So we need to talk about NHS pay. NEW shocking [post DDRB] data just in 4/1/24 👇 (SPOILER: Not "fair & reasonable")

We need to fix pay/retention to fix waiting lists- increasingly clear next GE will won/lost on NHS

Please read whole 🧵 & share widely/RT

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2/ You'll notice when ministers are in the media, they often talk about how hard "your viewers/listeners" have been hit by inflation. But what we need to do is separate fact from fiction (aka LIES), and it was 👇chart from excellent @jburnmurdoch @FT that really showed this well Image
@jburnmurdoch @FT 3/ But its not just government ministers gaslighting NHS workers that they have no right for their pay to keep up (like everyone else's), its also the so-called "independent" DDRB👇

Apparently doctors & dentists should not be protected when "its not taking place in other groups" Image
Read 31 tweets

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