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Pension tax driving half of doctors to retire early

Results from a survey by the Royal College of Physicians reveal that many doctors are choosing to retire earlier than planned, citing concerns over pension tax as one of the key factors in their decision.

A survey of doctors by the Royal College of Physicians (RCP), the Royal College of Physicians of Edinburgh and the Royal College of Physicians and Surgeons of Glasgow has revealed that almost half (45%) have decided to retire at a younger age than previously planned, with 86% of them citing pension concerns as one of their reasons for this decision.

The survey of 2,800 doctors nearing retiring age, showed that in the last 2 years, 38% of clinicians aged 50 to 65 report having had an annual pension allowance tax charge due to exceeding their pension threshold.

As a consequence:

  • 62% of senior clinicians said that they avoided extra paid work (such as waiting list initiatives or covering for colleagues)
  • 25% have reduced the number of programmed activities they work
  • 22% have reported having stepped down from a leadership or other role with extra remuneration

Some of the direct quotes from the survey respondents included:

  1. “As a consequence of taking up a role as deputy medical director, I received £85,000 tax charge. I work harder than ever, took up a senior role and have this. Thankfully I could pay with scheme pay otherwise I would have had to sell my house. I believed in the NHS, worked ridiculous hours as a junior, believing in a greater good but now I feel so unvalued and as though it was all an utter mistake. This is in part the tax charge but is mostly the uncaring, managed NHS where no one stops to ask what is required to do the job and to care for the carers.”
  2. “Having had to pay a £50,00 tax bill for my pension have seriously considered leaving the NHS completely. The increasing lack of flexibility in job planning and increasing intensity of inpatient work and the expectations put on a consultant delivered service without any additional staffing resource to manage this on top of the pension tax has added to my uncertainty around continuing in my current role.”
  3. “I received a £92,000 tax bill due to receiving an ACCEA award, running a regional specialist service and undertaking a leadership role. I have had to come out of the pension scheme in my 40s due to punitive projected tax costs and I now work the equivalent of two sessions per week unpaid. I intend to leave the NHS at the earliest opportunity."
  4. “My Pension issue is receiving a £25k tax bill for a bronze award in 2014 a £5 bill last year because of my bronze award again and an expected £32K tax bill this year for receiving a silver award last year due to tapering. How absolutely soul destroying. It’s like a punch in the face following a pat on the back, and you can quote me!”

RCP president Professor Andrew Goddard said: “These findings further demonstrate the need to urgently reform the pensions system in this current tax year in order to prevent additional pressure on the NHS.

“We know that the NHS will remain heavily reliant on this population of consultants, and if treated well they still have a lot to offer the NHS with 70% reporting that they would be willing to come back to work after retiring.

“We simply cannot wait until the next tax year for a solution, every week the issue remains more hard-working doctors will reduce their hours, driving up waiting times for patients and driving down staff morale.

“It is now vitally important that clinicians are engaged with and supportive of any proposed solutions, so we will be responding to the consultation in due course.”

Professor Derek Bell OBE, president of the Royal College of Physicians of Edinburgh, said: “Pensions is an important issue which affects the NHS’ ability to recruit and retain staff, particularly senior clinicians.

“While there are a range of contractual issues which do need to be communicated, pensions is most urgent because the NHS will face a crisis if the current situation is not urgently addressed.

“We support any amendment which will address the pension problem, and help doctors to prepare for their future in a fair and flexible way.”

Professor Jackie Taylor, president of the Royal College of Physicians and Surgeons of Glasgow said: “In order to address the current workforce crisis facing all parts of the NHS, we don’t just need to recruit new doctors, we also need to retain clinicians within the system. That’s why the government should seriously reflect on these findings as they prepare to reform the NHS pensions system.

“If government values our experienced NHS staff they would commit to action now to reform this punitive and unfair process, and ensure that valuable staff are recognised for their contribution to our health service and patient care.”

For more information or to see the full survey results, please contact RCP media manager Hannah Perlin on 0203 075 1466 or email hannah.perlin@rcplondon.ac.uk.

Notes to editors

About the Three Royal Colleges of Physicians Retirements Survey 2019

Each year the Three Royal Colleges of Physicians conduct a series of bite-sized surveys to rapidly canvas opinion on topics that are currently of importance for consultant physicians. The recent Retirements survey focused on the plans of consultants approaching or returning from retirement, to allow us to build up a better picture of the current workforce and how it is likely to change in the coming years.

Using an online survey software package for design and distribution, the Retirements survey was sent to 10,249 consultants and 3,356 (32.7%) responded.