NHS hospitals offer doctors cash in bid to tackle growing pensions crisis

Laura Donnelly
The Prime Minister has pledged to

NHS hospitals are offering cash to doctors in a bid to tackle a growing pensions crisis, an investigation reveals.

New rules mean GPs and consultants can be hit with tax rates of more than 90 per cent on their earnings - including their pension contributions - if they earn more than £110,000 a year. 

It means consultants are substantially cutting back on any overtime or weekend work as they can be taxed thousands for earning a penny over the threshold.

Boris Johnson has promised to “fix” the problem, with the Treasury to review the rules affecting high-earners, and changes to be introduced from next April. 

But an investigation by the BMJ reveals that 16 NHS trusts have taken matters into their own hands, amid concern that Government action will come too late to prevent shortages of staff this winter. 

Under such schemes, doctors are being offered the chance to opt out of their NHS pension, and instead extra cash sums, equivalent to their employer’s pension fund contributions.

Some trusts have seen up to 40 medics opt out of the pension.

But NHS senior managers said others were reluctant to leave the scheme, which is worth far more than the money paid into it. 

A survey by the British Medical Association found that 42 per cent of GPs and 30 per cent of consultants have cut their hours because of the pensions rules.

Waiting lists have soared by 50 per cent in three months in some parts of the country because doctors are refusing to work, in order to protect their pensions, senior managers have warned. 

In one case, a doctor who breached their £110,000 threshold income, by just £3, after doing an additional shift, triggered a £13,000 tax pensions tax charge, even though the extra income was not pensionable.

Northumbria Healthcare Foundation trust, University Hospitals Coventry and Warwickshire trust, North Cumbria University Hospitals trust and Dorset County Hospital Foundation trust are among those offering staff the chance to opt out of the pension scheme. 

Mark Warner, director of organisational development and workforce at the Dorset trust, said “in the absence of a national solution  we felt we had to do something to address the operational concern of people reducing their working capacity.”

But he said the scheme has had limited take-up, with medics reluctant to leave the NHS pension scheme, and continuing to ask to cut their working hours.

Royal Cornwall Hospitals trust said it was being forced to use more agency staff because of the number of doctors who have cut their hours.

Finn O'Dwyer-Cunliffe, policy advisor on pensions at NHS Providers, said: “The fact is that the NHS relies on quite a considerable amount of overtime work from senior staff, and the operation of the taper has put that at risk. There will always be a risk—where capacity is significantly reduced—that one short term way to plug that gap is by paying high rates for temporary staff.”

A Department of Health and Social Care spokesman said: “We’re making it easier for senior clinicians to better balance their pensions so they can spend more time with their patients in hospitals or GP surgeries without facing significant tax bills.”

“In addition to our comprehensive proposals to give doctors the pensions flexibilities they have called for, we are also taking immediate action.

“Guidance is being issued to trusts as soon as possible so they can provide flexibilities this tax year, including offering doctors further support and reimbursing staff who opt-out of their pension scheme so doctors can continue to do the job they love.”