Ooh, Time to Start Speculating About LTA Changes Again

Secret2ndAccount

I don't believe the policy singles out doctors. I think it will apply to the NHS pension. It will just be mostly doctors who are hitting the LTA. I'm sure some pen-pushers will benefit too.

gm0

/sarcasm

I feel so much better knowing that it is consultants and NHS senior managers.  Phew.  I thought for a minute there all other professions were being discriminated against to buy off a powerful lobby group (again*).  My mistake.

sarcasm/

*line their mouths with gold  (c) Aneurin Bevan

MX5huggy

LHW99 said:

I can understand the AA as limiting the tax relief the Government has to give, but the LTA has always seemed more of a limit on investment performance IMO. Two people could put the same amount into a pension, one chooses "plodding along" funds and one chooses higher risk, higher reward funds. While there are no guarantees, one could hit the LTA, and one not.

The issue is not with DC pensions but with DB pensions where LTA is calculated as 20 times the Annual pension so a annual pension of £55000 eats all your LTA. The your AA gets used up by the Pension Input Amounts which is not simply the contributions to the pension but the growth in its value multiplied by 16 which is large when inflation is high for CARE schemes and large when pay rises (due to pay rises or promotion) with Final Salary schemes. Most senior NHS staff have both CARE and FS membership. 

SouthCoastBoy

Is it a case of having your cake and eating it? Anyone on a db pension is already having a generous multiple of x20 to calculate their LTA. 

Ibrahim5

Doctors don't do extra work. Waiting lists grow longer. People go private. People say NHS rubbish, private good. Everyone goes private except very poor. NHS is privatised. Tory job done.

DoublePolaroid

gm0 said:

/sarcasm

I feel so much better knowing that it is consultants and NHS senior managers.  Phew.  I thought for a minute there all other professions were being discriminated against to buy off a powerful lobby group (again*).  My mistake.

sarcasm/

*line their mouths with gold  (c) Aneurin Bevan

I will preface this comment by saying, as one affected, I would happily do a job I enjoy for less money. The pension scheme is also excellent as it is, so (ignoring the impact of shifting goalposts on retirement planning) I’d accept a less generous pension.

However, there is currently an enormous problem with unfilled vacancies in the NHS (1 in 10) on a background of the U.K. already having fewer doctors than the OECD average per capita, which is contributing to lengthening waits in A&E and times measured in weeks to see a GP. It’s widely documented that pension rules are reducing the number of doctor-hours that would otherwise be available to the NHS. So the question that needs to be answered objectively and unemotionally, for the benefit of all, is how to deal with that?

Changing LTA and/or AA thresholds for NHS staff is one way. I’m agnostic about it. Genuine question, what other ways are there?

QrizB

DoublePolaroid said:

Changing LTA and/or AA thresholds for NHS staff is one way. I’m agnostic about it. Genuine question, what other ways are there?

Well, assuming the problem is simply AA and LTA limits, just off the top of my head:

• You could cap the "relevant earnings" used for NHS pension scheme accrual.
• Or you could employ senior staff on contracts outside the NHS pay scheme.

But I'm just a nym on an internet forum, I'm sure there are highly-paid management consultants who have a playbook for this sort of thing.

alibean121

DoublePolaroid said:

Changing LTA and/or AA thresholds for NHS staff is one way. I’m agnostic about it. Genuine question, what other ways are there?

I would assume the suggestion would be to remove the LTA for everyone... The system is already very advantageous to people in DB schemes. You would be able to have a much higher pension than someone in a DC scheme before you suffer the tax. 

LTA encourages lots of people getting near it to retire earlier than they might otherwise have done. If that isn't an outcome the government wants then really they should review the policy. It's not reasonable to review only for NHS pension though. I'm an accountant, if I worked as an accountant in a hospital, why would I deserve lower taxes on my pension?

saucer

I thought the suggestion was that people in the NHS pension who are likely to be breaching the LTA would be allowed to stop contributing to the pension. My assumption is that this would allow them to retain benefits up to the LTA without incurring an ever increasing tax bill.  I think the threat of the 70% charge over the LTA  (while continuing to pay 13.5% contribution of salary in), being lifted would make people who would have considered retiring early think again. 

Increasing the LTA itself is likely to be a lot more expensive and less likely I think.  

Malthusian

saucer said:

I thought the suggestion was that people in the NHS pension who are likely to be breaching the LTA would be allowed to stop contributing to the pension.

They can do that already and keep their post-tax salary.
The "problem" is that the NHS benefits are so good compared to Dr Punter's token contribution that it can often make sense to swallow both the AA and LTA charge and pay in to the NHS scheme anyway. This is partly a function of how generous NHS pensions are, and partly of how hard senior doctors are clobbered with tax if they take the money as earnings instead (like all earners in that 100k+ tax bracket).

My assumption is that this would allow them to retain benefits up to the LTA without incurring an ever increasing tax bill.

If you have retained benefits that are at or close to the LTA level you will still have an ever increasing tax bill, as inflationary increases will take you over the LTA. (Unless the Tories keep their promise to re-link the Lifetime Allowance to inflation... hahahahaha no sorry couldn't keep a straight face.)

I think the threat of the 70% charge over the LTA  (while continuing to pay 13.5% contribution of salary in), being lifted would make people who would have considered retiring early think again. 

I think you are very probably right - although the LTA charge is 25% + income tax or 55%, not 70%. On its own the LTA is not enough to stop a doctor from working (it only affects a slice of their remuneration, and they have spent their whole time at a senior level being very highly taxed whatever they do) but it is enough to make them re-think whether they want to carry on.
Doctors retiring later would however have no noticeable effect on the NHS, as it is designed to exist in permanent crisis. Any service that claims to offer a high-quality service to everyone for free will always be oversubscribed. If doctors work for longer, more people will ring up their GP until equilibrium crisis is restored.