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To ask the Secretary of State for Health and Social Care, what assessment he has made of the effect of pension legislation on the personal finances of high-earning doctors, that work unpredictable overtime shifts.
It is difficult to predict the impact of the tapered annual allowance for individual high earning doctors. Tapering applies to individuals whose taxable income exceeds £110,000 and whose adjusted income exceeds £150,000. Adjusted income is taxable income plus the value of annual pension growth. The standard annual allowance is reduced by £1 for every £2 of adjusted income over £150,000, tapering down to a minimum allowance of £10,000.
The taper calculation takes into account all taxable income, including non-pensionable income such overtime sessions worked for the National Health Service, or private work. The Department cannot therefore make an assessment of the impact of the tapered annual allowance on the personal finances of high-earning doctors.
The Department recognises that the annual allowance may contribute to decisions from NHS consultants to retire early or limit their NHS commitments. We are also listening carefully to concerns raised by senior doctors and NHS employers about the tapered annual allowance, and the particular difficulties caused by the impact of non-pensionable income from providing additional much needed clinical sessions on the taper.
The Department has consulted on introducing flexibility within the NHS Pension Scheme from 2019/20 to allow clinicians affected by annual allowance tax charges to reduce their pension accrual in deciles in order to manage any potential annual allowance tax charges.
In September 2019 guidance was issued by NHS Employers informing employers of the short-term approaches that they could take to mitigate the effect of pension tax on their workforce this tax year. The NHS has also implemented an immediate measure to preserve clinical capacity amid the increased pressure on services during the winter period. This will compensate NHS clinicians for the effect on their pensions of annual allowance charges incurred in 2019-20.