The pensions cap provides the perverse incentive to retire early

It goes without saying that we need our most experienced doctors. The pensions cap provides the perverse incentive to retire early.

Whilst Josephine Cumbo, and Sarah Neville for the FT reports 15th Jan 2015: NHS fears pension cap will spur exodus, Oli Smith for the Express reports: NHS EXODUS in just THREE MONTHS: NHS pension cap could see mass doctor walkout – A WAVE of high-ranking family doctors and surgeons could leave the NHS in just three months after the Government begins to clamp down on their earnings

A new pension cap means a range of senior medics, including family doctors, surgeons and other experienced medics, could be pushed into early retirement.

NHS officials fears the new cuts to the pensions will mean high-ranking doctors could leave the health service early to save their pensions.large number of senior doctors, as well as other high-earning public sector workers, are likely to breach the new £1m cap on what savers can accrue in their pensions without being taxed.

Chancellor George Osborne lowered the pension tax threshold in his last budget from £1.25m.

The reduced cap means a wide range of doctors above the limit will have to pay 55 per cent tax when withdrawing pension from April this year.

David Bailey, chairman of the pensions committee with the British Medical Association (BMA), said: “These tax changes could worsen the GP crisis.”

A survey by the BMA last year had warned one in three GPs hoped to retire within the next five years, largely because of discontent with the state of the cash-strapped health service.

More than two-thirds of senior doctors who had been working for 20 years in the NHS hoped to retire in that time frame.

Mr Bailey added: “An awful lot of doctors aged 55 and higher are looking very seriously at what their position is because the tax changes are going to seriously impact them.”

But, a Treasury spokesman tried to calm fears over a surge in early retiremenet.

He said the new cap “only affects four per cent of the wealthiest pension savers approaching retirement” and new pensions allowances only affected two per cent.

Towry, the financial adviser, said it was consulting about 20 senior medical professionals — including long-serving GPs — who are considering their future with the the health service.Andy James, head of retirement planning, said: “A lot of them have their eyes on the door.

“Many GPs have set up their practice so they can pay up to 28.5 per cent of their earnings into their pension and when they look at the potential tax charge for continuing to do this, they are thinking: ‘What is the point of carrying on?’”

Gary Smith, head of retirement planning with Tilney Bestinvest, said dozens of NHS staff had come to them about early retirement in order to save money.

Mr Smith explained: “In dealing with NHS professionals I continue to see a definite trend, with many senior and experienced staff opting out or retiring early to avoid incurring future annual allowance and lifetime allowance tax charges.

“I am due to meet up with a GP who has decided to retire early in June 2016 when they will be 56.

“I am also seeing a surgeon who has decided to retire when they reach their 57th birthday.”

Panic over a sudden mass retirement wave of senior doctors comes as the Government struggles to satisfy the demands of Junior Doctors, who have already planned two days of industrial action in the coming weeks.

The dispute over the Junior Doctors’ contract has led to fears that many young medics could travel abroad to work.


This entry was posted in A Personal View, Perverse Incentives, Stories in the Media on by .

About Roger Burns - retired GP

I am a retired GP and medical educator. I have supported patient participation throughout my career, and my practice, St Thomas; Surgery, has had a longstanding and active Patient Participation Group (PPG). I support the idea of Community Health Councils, although I feel they should be funded at arms length from government. I have taught GP trainees for 30 years, and been a Programme Director for GP training in Pembrokeshire 20 years. I served on the Pembrokeshire LHG and LHB for a total of 10 years. I completed an MBA in 1996, and I along with most others, never had an exit interview from any job in the NHS! I completed an MBA in 1996, and was a runner up for the Adam Smith prize for economy and efficiency in government in that year. This was owing to a suggestion (St Thomas' Mutual) that practices had incentives for saving by being allowed to buy rationed out services in the following year.

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