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.
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
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
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
1/ Very grateful to @wesstreeting for tackling medical retention head on today
"First we would take immediate practical steps. Why is it that government is sat idly by while doctors are forced to retire early for no other reason than a cap on their pension contribution, which ..
2/4 means they have a financial penalty for staying on. Lets change the rules to keep the good doctors that we have" said @wesstreeting
I completely agree 💯
More than in any year previously on record, there is an urgent need to act (see below👇)
3/4 We in @BMA_Pensions are always happy to offer our knoweldge & expertise around the problems of punitive pension taxation, & how government can fix them (which they desperately need to due to recrod waiting lists)
1/44 A really important long read🧵 updating on June @CommonsHealth. Pls read *all* carefully/share/watch clips & share/RT. Some really important updates including very grateful for SOS @sajidjavid showing central support for ♻️
1️⃣Taper tweak-why it didn’t fix the problem
2️⃣Tax unregistered why it will work (& “flexibility” won’t work)
3️⃣@sajidjavidgives green light to recycling
3/44 Please take time to watch the clips / read the transcripts. Some important info in here, and for what its worth, some analysis from me!
So lets start with
1️⃣Taper tweak-why it didn’t fix the problem
1/46 If you are a doctor this may have landed on your mat. Some more info for GPs, consultants & some crucial new info following @CommonsHealth this week. Sorry its long read🧵 Pls read all carefully/share. Needs fixing, by government NOW. What will, & importantly WONT work.
2/46 The full online @bmj_latest@ingridtorjesen
article is here 👇which has more important info. I would suggest reading the full version
3/46 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