Pensions - Articles - Treasury announcement fails to address broken tax system


In response to the Government’s announcement today of a new “public consultation” detailing how it will mitigate the impact of tax rules of members in the National Health Service (NHS) Pension Scheme, Barnett Waddingham has issued the following response.

 Nilesh Shah, Associate, Executive Pensions, said: “Whilst this may be welcome news for a huge number of affected NHS scheme members, the Treasury has so far failed to properly address the wider impact of an imperfect tax structure. There are hints in the latest announcement that these wider issues will in fact be addressed at some point in the future but, for now, we are presented with a stop-gap solution that adds complexity to an already-complicated pensions tax regime.”

 “Whilst the precise details will be in the promised future consultation, this announcement suggests that affected NHS Scheme members will have to make any decision to reduce pension accrual at the start of each year. This could still leave individuals limited by the option they select at the beginning of the year and may yet result in additional hours being turned down as individuals approach tax limits.

 “We request that any changes to the pension taxation system must apply identically to everyone in the same situation, regardless of their employer. It should be available to everyone—not just doctors!

 “We also advise that every affected member engages directly and actively with consultants that have extensive knowledge of the challenges facing senior NHS staff. The complex issues at hand require careful planning and consideration – particularly from a taxation point of view.”
  

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