The refusal of senior doctors to take on additional shifts has led to waiting lists for routine surgery increasing by as much as 50% in some parts of the country.
Higher-earning clinicians have been turning down extra shifts as the money they earn risks them breaching pension saving allowances and getting unexpected tax bills.
The chief executives of some hospital trusts are reporting that some consultants who could previously have been relied on to work on a Saturday or Sunday are now refusing to work at weekends altogether.
The problems have arisen following the introduction of the tapered pension allowance for high-earning professionals in April 2016. This reduces the amount of tax relief that they are able to get on their pension contributions.
The British Medical Association has warned the government for some time that if it does not tackle the problem senior clinicians would start to reduce their working hours or quit the NHS.
The government is currently consulting on changes to the NHS pension. A new 50:50 option would enable affected doctors to reduce their pension contributions by 50% in return for a 50% reduction to their pension’s growth.
The idea is that this would make it easier for doctors to take on additional shifts, fill rota gaps and take on important supervisory roles. However, critics of the proposal say it won’t work.
Gary Smith, chartered financial planner at Tilney, says: “The chancellor Philip Hammond has ruled out scrapping the tapered pension allowance, but has proposed making the NHS scheme more flexible, with a mooted 50:50 arrangement that would allow members to reduce the amount put in their pension to avoid the tax charges.
“However, our analysis shows that while such a move might help address the issue of tax charges, it would leave senior NHS staff no better off than if they incurred the tax charges, so is little more than a mirage.
“The likelihood of a new chancellor being appointed following the imminent change of prime minister might be an opportunity for a more fundamental rethink on the tapered allowance – introduced by George Osborne – which is widely perceived as unfair. While controlling the cost of pension tax relief is understandable for government, there are much simpler solutions, like a lower annual allowance or a flat rate of relief for all.”
Steve Webb, director of policy at Royal London, takes a similar view. “It has to be a priority for the new chancellor to tackle this issue. No one objects to limiting pension tax relief for higher earners, but the way it is being done is absurdly complex and is having unintended consequences for the NHS.
“Tweaking the NHS pension scheme would simply be a sticking plaster response. The ‘tapered’ annual allowance needs to be abolished and replaced with a simpler across-the-board limit on pension contributions.”
This article was first written and publish by our sister magazine Moneywise.