The Government is aware that the annual allowance may contribute to decisions from senior clinicians to reduce their National Health Service commitments, although a precise estimate of the change in consultants’ working hours as a result of pension tax is not available. The Government is listening closely to concerns raised by senior doctors and NHS employers about the tapered annual allowance.
The NHS has implemented a short-term measure to compensate NHS clinicians at retirement for the effect on their pensions of annual allowance tax charges incurred in 2019/20. To address this issue for future years, the Government is holding an urgent review of the annual allowance taper. The review will report at Budget on 11 March and will also consider the findings from the Department’s recent consultation on a package of pension flexibility for NHS clinicians who face annual allowance charges.