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

Jul 3
1/6 If you follow me, you know what a car crash pension taxation is & what a *HUGE* threat it is to the NHS retention & patient safety.

Can you *please* spend a couple of minutes, right now, doing this 👇



If you think its a waste of time, read on.

RT!
2/6 Over the past 3 weeks in government (on both side of the political fence) there are green shoots that penny may be starting to drop.

For example (1) @wesstreeting (shadow health)

3/6 (2) @sajidjavid gives central support for recycling ♻️ ("make it clear that it is something that we, at the centre, are happy with"), & some superb questioning by GP/MP @drlukeevans

Read 6 tweets
Jul 2
1/24 Some useful threads on NHS pension scheme, pension taxation, & why its *still* such a car crash for the NHS (retention). #TaperDidntFixIt

For me this has always been about two simple themes- patient safety & survival of the NHS

HOW IT STARTED ('19) HOW ITS GOING ('22) ImageImage
2/24 I'm going to use this as a compendium of some of the more important /educative/impactful tweets/threads🧵 I've done over the last 18 months or so they are all in 1 place. For some, they are done annually each tax year. Here goes- enjoy I hope you find it useful
3/24 WHEN: Saturday, October 10 2020

WHATS IT ABOUT: 19/20 AA and tools

Length (tweets): 17

Initial Reach (impressions): 209000 👇

Read 24 tweets
Jul 2
1/32 An important🧵 summing up some new worrying information & terrifying predictions, & how to reverse these concerning trends -gvmnt needs to finally take head out of the sand regarding pensions taxation (& and how *you* can help). Pls read to end & share/RT. ImageImage
2/32 So contrary to the Conservative manifesto pledge of 6,000 more
family doctors by 2024, @thetimes reported yesterday now 27,627 fully qualified full-time GPs in England, down from >28,000 this time last year & almost 2,000 fewer than in 2015.

thetimes.co.uk/article/doctor….
3/32 But what the Times article fails to do is dive into the reasons WHY GP numbers are dropping (probably because they are too focussed on obsessing on drop in %age of face to face appointments). But very clear fewer GPs on ground delivering highest activity EVER. Image
Read 32 tweets
Jun 27
Further motion about pension recycling ♻️at #ARM22 noting recent support from SOS @sajidjavid for ♻️
. @alanjrobertson speaking for the motion points out tax relief removed by steep tiering
. @Vish_Sharm points out its "completely shameful" for employers to keep your employer contributions
Read 4 tweets
Jun 27
1/ Very grateful to @FeryalClark MP asking the Minister about rising CPI inflation & impact on pension taxation. A🧵

Its a CRITICIALLY important question, but we need to explore the answer given by Edward Agar, Minister for Health- because put simply- it is plainly wrong

Pls RT
2/ So to understand the problem start by reading this article in @bmj_latest. The full online article by @ingridtorjesen article is here 👇which has more important info. I would suggest reading the full version

bmj.com/content/377/bm…
3/ The full article contained a subtle but important error (caused by the editing process of a long & complex subject, but removal of two crucial words completely changed the meaning!) so please read alongside this rapid response which I thought needed urgent correction
Read 21 tweets
Jun 27
1/18 Really important report by @dnepo @aneelbhangu out this morning as reported by @ShaunLintern in yesterdays @thesundaytimes

Grateful to have received an early copy for comment &here are some thoughts in a short 🧵
2/18 Firstly this is NOT and never was a "COVID" backlog. As I have repeatedly pointed out the backlog has building over a decade, only worsened by but not caused by COVID.

A key part of that has been - as acknowledged by the authors - the interaction with pension taxation
3/18 BUT the problem is not limited to consultants "not taking additional work" - far from it. That particular problem, largely driven by the tapered AA was/is real, but a much bigger threat is reduction in activity (from reduced sessions) and loss of activity by early retirement
Read 18 tweets

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