Pensions - Articles - Pensions tax rules cause problems for senior health workers

Aegon comments on problems pensions tax rules are causing for senior health professionals

 Steven Cameron, Pensions Director at Aegon said: “It’s in no-one’s interest that senior health professionals are effectively being forced into early retirement to avoid paying hefty pensions tax bills if they break the pensions lifetime or annual allowance. These limits were cut dramatically seven years ago and the experience of the NHS shows they are now affecting the retirement plans not just of the super wealthy. The issues facing healthcare professionals have attracted a great deal of attention but now is the time to revisit this topic for everyone, not just those in one profession.

 “The limits are most likely to affect people who are, or have in the past been, members of a defined benefit pension scheme. These are now much rarer in the private than the public sector, but many in the private sector may have built up a defined benefit entitlement in the past. This means future employer or personal pension contributions can push many people, not just NHS consultants, above the lifetime allowance and incur a tax penalty.

 “Offering special concessions to NHS professionals might have addressed concerns over early retirements there, but would have created both complexity and unfair comparisons with those affected in other professions. However, it is only right that those in this position, NHS employee or otherwise, should have the right to swap future employer pension contributions for an increased income. Many employers in the private sector already offer this to higher earners.

 “Alongside this, we’d urge the Government to look again at the lifetime and annual allowances. The lifetime allowance puts a cap of £1.06m on how much you can have in your pension fund. While that may seem like a lot, it could buy a lifetime income at age 60 of around £20,000 to £25,000 depending on whether you’re buying a single or joint life annuity and how much inflation protection you want. This sum would certainly not be regarded as a particularly high income for people of working age.”

Back to Index

Similar News to this Story

Workplace and State pensions not enough to retain lifestyle
Analysis from Aegon shows those wanting to retain their lifestyle into retirement shouldn’t be lulled into a false sense of security just because they
Young adults at home are draining parents pension pots
Parents are forking out on average an extra £414 per month to afford their adult children remaining in the family home for longer than expect
Current annuity rate at lowest for twenty five years
Steven Cameron, Pensions Director at Aegon comments on figures from Moneyfacts showing the current annuity rate is the lowest since at least 1994 (whe

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS


Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.