Thread by @goldstone_tony

1/ Grateful for @imogent_ @thetimes covering the @BMA_Pensions GP CPI calculator in ST

See the problem for yourself by accessing free BMA tool at 👇
bit.ly/CPIPensionDisa…

A financial advisor said "Doctors worry
about the tax bills in their pension. It has been part
of every

2/ conversation I’ve had with a doctor for
three to four years but now it is really front and
centre. This problem for the doctors is having an
immediate knock-on effect on waiting lists."

3/ The key problem is due to the rate of increase of inflation which is unprecendented

4/ Due to the complex way AA is calculated, a flaw in the Finance Act uses the previous september CPI to define "opening value" which is how much your pensions can increase before being tested by the Annual Allowance. Last years CPI was 3.1%

5/ But this year inflation is currently running at 9.1% with Bank of England predicting it might reach 11%. Even at 10% by September, plus 1.5% for dynamisation / revaluation - this could cause eye watering charges for doctors, especially GPs who have longer in a CARE scheme

6/ "According to the BMA, some GPs earning £115,000 (the average salary for a GP partner) could be lumped with an annual allowance tax charge bill of
more than £30,000 for the 2022-23 tax year"

7/ "Doctors are also being caught out by the lifetime
allowance, which is set at £1,073,100. If your pot or
pension benefits are worth more than this, you
could be taxed as much as 55 per cent on the excess,
when you withdraw it."

Please also note this is also a big problem

8/ with runaway inflation. Inflation at 10% this year equates to a 10% real terms drop in the LTA by it being frozen. We already know there is a close relationship between lowering the LTA & Voluntary Early Retirements 👇

What will a further 10% real terms drop in LTA do?

9/ "The BMA wants the NHS pension scheme to become a “tax unregistered scheme”. This would mean that doctors would not get tax relief on their
contributions, but then the pension would not be
tested against the annual or lifetime allowance."

This is absolutely correct long term

10/ However the urgency of the 22/23 situation will require more urgent action. @BMA_Pensions have already met with officials from DHSC & also HM Treasury to suggest 3 immediate actions that could help

11/ [1] The Finance Act is clearly broken. It is intended to measure growth ABOVE inflation, but currently is doing nothing of the sort. With a very small amendment a single value for CPI could be used

12/ [2] Another quirk in the Finance Act relating to "'negative growth" needs fixing at the same time

13/ [3] Finally if the Finance Act cannot be changed, other solutions like the 19/20 AA compensation scheme could be rolled out in all 4 nations

14/ Its fair to say we are extremely worried in @BMA_Pensions about the 22/23 tax year. Very high inflation is driving massive & unprecented AA tax bills, other quirks in the systen are driving early retirements & LTA is being destroyed by high inflation.

15/ Same edition of the ST @ShaunLintern reports 👇 that waiting lists could reach 14.3m by 2030.

We *must* urgently solve RETENTION of the senior medical workforce. @Jeremy_Hunt @sajidjavid @RishiSunak

Pensions tax is the elephant in the room

https://twitter.com/ShaunLintern/status/1540966896400482304?s=20&t=TG185Nh1uBL3MqFcTU2ieA

16/

Please take the urgent actions required to solve this huge threat to the NHS.

#taxunregistered #CPIdisconnect

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