Ministers ‘planning NHS pensions overhaul’ to end doctors’ tax trap

Ministers are planning a significant overhaul of NHS pensions to end the tax trap on doctors’ pensions, which has seen many senior medics retiring early to avoid working for free.

Chancellor Philip Hammond and Health and Social Care Secretary Matt Hancock are looking at plans to end the pensions tax trap, with one option being to alter the NHS pension scheme so that staff could make only half their usual pension contributions for up to ten years during their careers.

This is known as a “50/50 pension” and is already used in local government. This option would mean that healthcare workers would pay less into their pension, but then receive significantly less when they retire.

It is hoped such a move would prevent the current situation, where older doctors are being hit with significant tax charges for exceeding their pension allowance limits. This has led to experienced doctors cutting their hours, refusing to work extra hours, or retiring earlier than intended to avoid being charged more than 100% tax on some of their salary.