NHS Pensions: Taxation

Part of the debate – in the House of Commons at 4:21 pm on 8th July 2019.

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Photo of Elizabeth Truss Elizabeth Truss The Chief Secretary to the Treasury 4:21 pm, 8th July 2019

The Government keep public sector pay and pensions policy under constant review in the context of the wider public finances. For the majority of savers, pension contributions are tax-free. The annual allowance is a fiscal measure which operates across all registered pension schemes in both the public and private sectors, alongside the lifetime allowance. The measure is kept under review by the Government to ensure that the benefit of tax relief on pension schemes remains affordable.

Some senior clinicians face pension tax charges owing to the increase in the value of their pension accrual. I understand that the Secretary of State for Health and Social Care is currently engaged in discussions with senior representatives of the British Medical Association. The Government are taking this issue very seriously, and that is the right place for those discussions to be held. However, the House will recognise that the same tax rules must apply identically to everyone in the same situation, regardless of their employer. It is simply not possible for the tax rules applying to senior clinicians in the NHS to be different from those that apply everywhere else.

I understand that the Secretary of State for Health and Social Care is to publish a consultation on proposals for a new 50:50 scheme providing pension flexibility for clinicians in the NHS. The scheme will give senior clinicians in England and Wales more choice in respect of their pension accrual, and will thus control tax charges. Since last autumn, all members of the NHS scheme on the taper have been able to elect for the pension scheme to pay any tax charges now, and so avoid any impacts on take-home pay, in return for an actuarially fair reduction in their pensions.

I recognise the concerns that have been raised, and I assure the House that the Government will continue to monitor the impact of pensions policies on public service delivery.