Dr Tony Goldstone Profile picture
Apr 9, 2022 38 tweets 15 min read Read on X
1/ Peri-retirement in NHS & Pension Tax 🧵 + free tool- #doesntpaytostay

This is a *super* important thread. Sorry it's complicated, pls read ALL carefully & share/RT. Its vitally important you #knowYOURnumbers so @BMA_Pensions built a free tool to help - you could save >£100k Image
2/ @TheBMA @BMA_Pensions have been saying for years, that its crucially important we RETAIN the senior experienced workforce. There are a number of important levers to do this, including pay, pensions & pension taxation. Image
3/ As the annual & lifetime allowances have been whittled away over the years, the number of senior doctors opting for early retirement has increased as it simply #doesntpaytostay- particularly for those affected by BOTH the annual & lifetime allowances Image
4/ As we have repeatedly pointed out to treasury & elsewhere in government, higher rate tax relief is removed *in its entirety* by unprecedented steep tiering not seen in ANY other public sector scheme Image
5/ This will remain the case when new contributions structures for @nhs_pensions are introduced in October 2022 - the NHS will continue to have the steepest tiering of all public sector schemes. That's completely unjustified in a CARE scheme and removes *all* higher rate relief Image
6/ Despite having removed all higher rate relief from tiering, this (non-existent) higher rate relief is then removed by the Annual Allowance (and tapering for higher earners) and again the (non-existent) relief is limited via the lifetime Allowance. Image
7/ The net result of that, as per @The_BMA modelling with our actuarial advisors, is high earners in the NHS scheme can end up paying up to 10x the amount towards the pension for each pound of pension. This is clearly completely unfair and completely unjustified.
8/ The NHS is clearly in a difficult place. As the waiting list graphs above in tweet 2 show, it is somewhat disingenuous to call this "COVID-19" backlog. These problems have been building for years, & punitive pension taxation is the elephant in the room. Image
9/ Despite this, pensions get only a passing mention in the plans to resolve the backlog- the only stated plan to improve this situation "regional pension seminars to explain how the schemes
work and debunk common myths, to enable staff to make informed decisions" Image
10/ At @The_BMA we agree it is vital our members make "informed decisions". So we have made a simple & free to use tool to allow 1995 officer members >59 to explore their options. We are grateful to @gdcuk for cross checking & agreeing the underlying maths. Image
11/ Sorry the tool is not for 2008 scheme members who have a later retirement age and can access 'late retirement factors' (and a more complicated pension that cant be accomodated in a simple ready reckoner), nor GPs who have a 1995 CARE pension. Image
12/ The tool has two "case studies" - one is the same as case study used recently by NHSEI & another (shown below) - who is a 60 year old consultant at the top of the payscale with CEA7 & 5% on call. Image
13/ By default the tool shows retirement in April '22 versus delaying retirement to April '23. We have suggested figures for inflation in September (8%), and the current proposed pay award recommended by DHSC (2%). You can model your own predictions. Image
14/ This risks an unprecedented pay cut not only to pay, but also final salary pension - & therefore each month that is worked in 22/23 potentially "bakes in" any pay cut to final salary (& your pension). Image
15/ Conversely the date of your retirement in 22/23 is based on your date of retirement, and the prevailing rate of inflation in September of each year - estimated as follows based on what September CPI will be (again you can choose your own estimates). Image
16/ So what does it mean for our example consultant? They could retire now and achieve a pension (after LTA reduction) of £60,196. After uprating by September 2022 CPI that would be £65,011 in April 2023. Image
17/ Or by delaying retirement by 1 year they would get extra pension in the new 2015 scheme which would need reduction as retiring before state pension age, but by baking in a subinflatonary pay award, pension in April 2023 will be £62,843 Image
18/ So the effect of delaying retiremenent has resulted in a pension LOWER by £2,168 - every of year of their retirement. This doesn't include the £60,196 you have given up in pension by not retiring age 60 . Image
19/ That example also doesnt include any potential AA liability- if you want to see potential AA charges you can provide carry forward/ threshold income to see what effect that has - so in the example below the consultant would also get a £9.8k charge! Image
20/ So this example consultant would need to pay another £20k in pension contributions, plus an AA charge, all to receive a LOWER pension. For them it clearly #doesntpaytostay - but its important to look at your own numbers.

bma.org.uk/doesntpaytostay Image
21/ Many senior clinicians will still have a lot to give and may wish to stay in the service with "Retire & Return" - we have included a net pay modeller to estimate net pay & pension if you return - in this example they get comparable net pay at 6.5 PAs but #knowyournumbers Image
22/ Clearly the numbers in the tool may shock many people. This year is unusual due to high inflation (and potentiual therefore for an unprecedented pay cut which is driving this modelling based on the DHSC pay recommendation). Image
23/ But high inflation will also cause havoc with Annual Allowance (due to disconnect between inflation years used in AA and revaluation) & other factors which we have been warning government like the scheme design (lack of "late retirement factors").
24/ So what do @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**.
25/ 1️⃣ FIX PENSION TAX.  For high earners, particularly those affected by both the LIFETIME ALLOWANCE and ANNUAL ALLOWANCE, this SERIOUSLY reduces the value of building up additional pension when over both of these limits.
26/ The Lifetime Allowance was frozen in 2021 (it previously kept up with inflation). With high inflation, the LTA is becoming seriously eroded over time. Image
27/ Government knew this was a problem for judges, who had similar recruitment / retention issues to doctors- and they fixed it with a tax unregistered scheme.
They could do the same for doctors / other high earners in the scheme. Image
28/ It’s completely fair to taxpayers as well - you wouldn’t get tax relief on contributions, but then pension earned in that scheme is not tested against the Annual or Life Time Allowances.
29/ Once a member of staff moved over to the “tax unregistered” scheme they could carry on working as many hours as they wish, for as long as they wish, without worrying about falling foul of complex pension taxation rules.
30/ With record waiting lists, the only way to make a dent in the short and medium time is to improve retention - this could make a serious difference to that.
31/ 2️⃣ 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.
32/ With inflation running higher than expected this year, there’s a risk of a record breaking sub-inflationary pay award - and the pay recommendations from DHSC do not make good reading that this will be fixed anytime soon. Image
33/ 3️⃣ 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.
34/ 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👇.
35/ Go later than 60 and you are burning pension unless they introduce "late retirement factors". Image
36/ There you have it @sajidjavid @RishiSunak @Jeremy_Hunt. If you haven't already, please read this entire thread carefully. We believe there is an existential threat to the NHS. But this is all fixable, by government. @NHSMillion
37/ To summarise #saveournhs
1️⃣ FIX PENSION TAX - like you have for judges
2️⃣ FIX PAY - down 30% in a decade - with high inflation biggest risk ever to pay & pensions
3️⃣ FIX PENSIONS - late retirement factors
38/ If govmnt really​ want to fix retention (& they *really*​ need to), they must resolve these issues. If it #doesntpaytostay people will leave. Make sure you #knowyournumbers

Please share widely / RT / Quote RT

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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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