Revealed: Seven in 10 senior doctors plan to retire early after pandemic amid ‘punishing’ pension tax bills

The warning comes after a survey by the trade union found that 70 per cent of consultants over 50 are considering voluntary early retirement, with half planning to reduce their working hours from next year.

READ MORE: Should doctors quit the NHS over ‘punitive’ tax measures? 

Dr Eunson, a consultant paediatrician in NHS Borders, said most consultants were “prepared to stick at it for this winter and while we remain in pandemic”, but he expects to see a surge in departures from 2022.

He said: “It’s driven by several factors, the biggest of which is the pension tax issue which is – insanely – still driving senior clinicians and other staff out of the NHS earlier than they otherwise would have planned to.

“The problem with that is that workforce planning is based on the number of people we have coming in at the bottom meeting the number of people leaving at the end, and if you are losing five years of a consultant career – and didn’t factor that in 20 years ago when you were planning intakes to medical school – then you’re going to start seeing these gaps.

“You don’t have the specialists there to train the young doctors coming through, and you don’t have the people experienced enough to replace the senior consultants who’re leaving.

“These were going to be the people we’re depending on to get through the backlog of work, so that’s going to be one of the big issues.

“But for many small units where you may only have one or two people doing very specialist things, especially in areas like the Borders or Inverness or the Western Isles, losing one person can be the difference between a safe, sustainable service and a service that collapses.

“Retirement is one part, but 50% of the consultants we surveyed said they are planning on reducing their clinical sessions in the next year, and there’s not the ability of those left behind to suck up the extra work because they’re exhausted too.

“If there’s no solution to the pension tax issue, then people are just not going to have any incentive to stick with it – they’re burnt out and it’s costing them a fortune to keep working.”

Dr Graeme Eunson

Dr Eunson said he was aware of one senior medic in Scotland who had paid £75,000 in pension tax over the past five years in addition to income tax and pension contributions.

Recent UK figures indicate that the number of NHS doctors taking early retirement has tripled over the past decade, with Graham Crossley of wealth management experts Quilter blaming “eye-watering” pensions tax bills for “[disincentivising] doctors to take on extra hours at a time when the health service is creaking”.

Many are reportedly turning to financial advisors for help after receiving five- or six-figure tax bills unexpectedly.

The long-runnning problem relates to the NHS ‘defined benefit’ system, which means that any growth in salary can translate into a large perceived growth in pension contribution.

READ MORE: What’s really behind the worst winter crisis facing Scotland’s NHS?

Most workers are allowed to save £40,000 a year into their pension tax-free, but for higher earners this tapers down to just £4000 – above which they begin to trigger a tax bill.

Chancellor Rishi Sunak sought to ameliorate the issue in the March 2020 Budget by raising the salary at which this taper threshold kicks in from £110,000 to £200,000, but a change in working patterns during the pandemic – including consultants working extra shifts – has tipped many more into the bracket for high charges.

“For most people staying on longer doesn’t get you a better pension, it doesn’t get you more money, it just brings you larger and larger tax bills each year,” said Dr Eunson.

“At the moment, all people have is the option to refuse to take on extra responsibilities or to reduce their hours below 10 sessions a week.”

Chancellor Rishi Sunak raised the taper threshold from £110,000 to £200,000 in March 2020

Dr Eunson has now written to Health Secretary Humza Yousaf, urging the Scottish Government to adopt a Recycling of Employer Contributions (REC) scheme as a temporary fix, enabling doctors to opt-out of the NHS pension but reinvest employer contributions on their own – for example into a share plan.

A similar initiative is already in place in some English NHS trusts, and the Welsh government has written to its health boards encouraging them to pursue this option.

Dr Eunson said this would give senior medics a “powerful incentive to delay retirement”.

READ MORE: Warning social care in Scotland at ‘very real risk of collapse’ this winter

A spokeswoman for the Scottish Government said its powers to resolve the issue are “severely limited” as pension taxation is reserved to Westminster.

She added: “We wrote to the Chancellor of the Exchequer on 3 June 2021 asking for such consideration to be given to the current pension taxation regime to help ensure that health workers in Scotland can fully contribute to our recovery efforts. We will continue to press UK Ministers to give due consideration to this matter.”