Doctors’ pension row spreads to other arms of the public sector

published 25 September 2019

The government's attempts to resolve the crisis that has seen doctors refuse to take on extra shifts or even opt for early retirement because of pension tax rules are at risk of backfiring. Other public sector workers have now begun to demand similar concessions.

Ministers had hoped that reforms to the NHS Pension Scheme would help solve a growing staffing crisis in the health service partly caused by senior doctors choosing not to work more because of the impact on their tax bills.

The changes should mean fewer doctors are caught out by the tapered pension allowance, which reduces the contributions that higher earners may make to pension schemes; it also levies high tax charges on those who exceed their allowances.

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However, the changes have now prompted calls from senior public servants in other professions for similar treatment. For instance, the Forces Pension Society, which represents the interests of members of the armed forces, has told ministers that many senior soldiers are being caught out in the same way as doctors.

Representatives of police and fire chiefs have made similar statements. The spreading row will increase the pressure on the Treasury to consider more fundamental pension reforms. These may include scrapping the tapered allowance altogether.

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.