Pension flexibility for NHS Clinicians

I have received the enclosed update from the Secretary of State for Health and Social Care about pension flexibility for NHS Clinicians:

Dear John


I’m writing to update you on the urgent steps that the Government is taking to resolve the pension tax issue that is affecting delivery of frontline NHS care for patients. Yesterday I published a consultation on a new package of pension flexibilities for senior NHS clinicians who face annual allowance tax charges, including consultants, GPs and top nurses.

The NHS Pension Scheme is a highly valuable part of the package of pay, terms and conditions for NHS staff, which continues to compare very favourably with schemes in other sectors. It provides hard working and dedicated staff with security in retirement after decades of public service and patient care.

The Government provides tax incentives to encourage pension saving across society. Pension scheme contributions can therefore be made tax-free. However, the cost of providing this tax incentive is very substantial so there are restrictions on the amount of pension saving that receives tax relief.

The relative generosity of the NHS Pension Scheme means that for some staff, largely senior doctors, changes to the way that these restrictions operate has resulted in their pension growing to a level beyond their tax-free allowance. A tax charge is levied on the value of pension growth that exceeds the tax-free allowance. This is causing significant financial concerns to senior clinicians, with many now looking closely at whether it is in their financial interest to do extra work for the NHS.

The Government recognises that in response to concerns about annual allowance tax charges, some clinicians are seeking to control their income and pension growth by limiting or even reducing their NHS work to avoid breaching their annual allowance for tax-free pension saving.

Discussions with the medical profession and employers have highlighted the need for clinicians to have wide-ranging pension flexibility to control the amount of tax-free pension saving they build up in the NHS Pension Scheme and so manage their annual allowance tax liability without reducing their workload.

Accordingly, the consultation proposes giving senior clinicians the option to:

  • Choose a personalised pension growth level at the start of each tax year (1 April) and pay correspondingly lower contributions. The level chosen would be a percentage of the normal scheme contribution in 10% increments. For example, 50%, 30%, or 70% of the full accrual level.
  • Fine-tune their pension growth towards the end of the tax year when they are clearer on total earnings. This will allow them to ‘top-up’ their pensions to the maximum amount without hitting their tapered annual allowance limit.

This flexibility will allow clinicians to tailor the level of growth in their NHS pension so they can maximise their contribution to patient care without sudden annual allowance tax penalties and whilst sustaining growth in their pensions.

The Government is committed to ensuring that hard-working clinicians who provide additional care for NHS patients do not find themselves considering reducing their work commitments, as a result of the interaction between their pay, their pension and the tax regime that surrounds this. The consultation therefore seeks views on how new important flexibilities in the way the NHS Pension Scheme operates can ensure that senior clinicians are rewarded properly for additional work whilst managing the impact on their pension and their tax liabilities in a fairer manner.

It’s vital that we get this right, so we want NHS staff and employers to contribute their views to the consultation so that we get these changes right. The consultation is open until 1 November 2019 and I ask you to encourage interested constituents to have their say. Subject to the consultation outcome and amendment of NHS Pension Scheme regulations, the new flexibilities would be in place ready for the next tax year.

The Government also recognises need for urgent action to help retain and maximise the contribution of our highly-skilled clinical workforce. NHS Employers last week published guidance on possible local approaches that employers can consider taking immediately to mitigate the impact of pension tax on their workforce this tax year.

Taken together, I believe these actions are a clear statement of intent by Government to find an urgent and comprehensive solution to this issue and ensure hardworking NHS staff are not penalised for working overtime. It’s all part of our commitment to the NHS.

Yours ever,



  1. gyges01
    September 14, 2019

    The raceless apartheid no one protests … is the difference between public vs private sector employment (and is most probably unlawful under common law).

    1. Lifelogic
      September 15, 2019

      Indeed tax laws should be applied equally it is not just NHS Clinicians it is a absurdly idotic rule (Osborne & Hammond to blame) for everyone.

  2. Jim
    September 14, 2019

    How come only NHS staff get special tax treatment on pensions? Will anyone whose pension fund is approaching the tax free limit be able to avail themselves of these proposals, or is it another case of ‘one rule for State employees, one rule for everyone else’?

  3. adenwellssmith
    September 14, 2019

    Equal before the law?

    No, special treatment for the favorites of the state.

    The rest of us are proles, we have to put and pay for it all.

    1. Lifelogic
      September 15, 2019

      The proles are the ones paying for it. Many have no private pensions at all. Pay in the state sector including pension of about 150% of the private sector. With far more sick days and other advantages too. This for very poor output, productivity or value too.

  4. adenwellssmith
    September 14, 2019

    Assets in the NHS fund – zero.
    Liabilities – massive.

    Socialist pensions for you

    Now why are those debts hidden off the national debt?

    What do you have to hide?

  5. William Long
    September 14, 2019

    Why are NHS clinicians any different to anyone else? The fact is that the ill judged chnages to pension law have affected everyone with earnings at a certain level. If new rules are necessary for NHS clinicians why not for policemen, firemen or even, dare I say it, people employed in the private sector who are actually producing the wealth that pays for the jobs of all those employed by the State, including the Members of Parliament who were clever enough to foresee the implicatons of the Lifetime Allowance and decided that it should not apply to people as important as them.

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