Is scrapping the Lifetime Pension Allowance for NHS staff fair?

By FMB on 

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Currently the Health Secretary Matt Hancock is lobbying the Chancellor Phillip Hammond to look at waiving the Lifetime Allowance on NHS pensions, specifically a problem for high earners such as Doctors.

Why is this a problem?

There is a limit to how much money you can save in a pension both in a year and again in a lifetime. The NHS pension is a defined benefit scheme and as such the way to decide when the limit has been reached is a by a multiple of earnings, which still works out very generously compared to the Defined Contribution equivalent of £1million. However the problem is causing GP's  to retire early according to Hancock and thus a potential mass exodus from the profession which obviously could have consequences for public services.

Why just the NHS?

I suppose the issue is one of recruitment, but the same theory will apply to other sectors that have generous pensions, the Civil Service included. Is it fair to single out health professionals for special tax privileges?

What can be done?

Several options have been mooted including raising or scrapping the Lifetime Allowance and focusing on just the Annual Allowance as a limit. However, these reliefs will have to be paid for with cuts elsewhere. Less popular with public sector workers would be to implement a different pension regime, so this does not become a problem in the future. Politically sensitive and highly unlikely!

Want to know more about the Lifetime Allowance? Read our guide!

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