On March 6th a doctor wrote about his pension

NHS choice

On March 6th 2019 , Dr Nitin Arora wrote  on my blog. You can read the entire article on the link.

He detailed how his tax bill , combined with the deferred taxation on his pension , meant that he was losing money taking on extra work.

He ended…

My Conclusion

This may well be the next big crisis facing the NHS

There are a number of hospitals running with lots of consultants doing extra lists. If these lists become subject to a marginal tax rate of >80%, and for narrow bands, >100%; it will be difficult to find people willing to work extra hours for minimal or no reward.

The advice from financial professionals was to try and

  1. Use scheme pays
  2. Do less non-pensionable work
  3. Try and stay below £110,000 of taxable income

The problem the NHS has is that we have most consultants working ~20% more than full time, with anything over 10PA being non-pensionable; and lots of departments rely on consultants doing extra lists.This is not conducive to efficient tax planning for individuals.

When people realise that their extra 20k of income results in a 12k tax bill, and potentially 3-5k of ‘scheme pays’ they may elect to stop doing this extra work.

We as custodians of the NHS need to look at the bigger picture, and alert the government to the impending crisis. The taper, AA and LTA together, are going to drive an already demoralised workforce to cut working time. At this time of an overstretched health service, and staff shortages, this would be a disaster.

Now , over 8 months later, Government is moving into panic mode because what Dr Nitin Arora predicted, has happened.

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Dr Arora, was not the first to flag the situation, but he was the first to take to social media and start throwing flags.

He should be congratulated for his bold and eloquent warnings. As with the Port Talbot issues, it was the FT’s Jo Cumbo who took up the issue and gave it national prominence.

Now the Government are deciding upon a course of action which looks illegal, rather than allow the demoralisation of senior staff to ruin its chances of re-election.

Winter is coming and the Government is trying to link its panic measures to the annual upsurge in demand on the NHS at this time of the year, but we should take with a pinch of salt the local crisis in the wards and theatres. The Government are running scared of the NHS overtaking Brexit as the main issue on which we vote.

Pensions come back to bite the Tories once again

The reason we have an annual allowance taper is because we did not get the radical overhaul of pension taxation promised by the George Osborne in 2015 when he consulted and in 2016 when he was supposed to deliver it.

We didn’t get that overhaul because it was shelved – it was made clear that the Government didn’t want to risk its slim hold on power by introducing new pension taxation rules that could have caused a back-bencher revolt.

The sensitivity was that we were in the months leading up to the BREXIT referendum.

So the Government brought in quick-fix sticking plaster policies like the AA Taper and the MPAS and all the complexity of PIPS and interactions with LTA, to stop pension tax-relief being used by the wealthy to avoid paying fair shares.

The AA Taper was never properly tested and the problems at the NHS , the army and other workforces with public sector pensions is that the AA Taper is counter-productive. It reduces production.

Now it looks like their 2016 capitulation will come back to bite them in the bum again.

They had been warned.

Pensions are monstrous – they cannot be ignored

The cost of pension tax relief is something about £40bn pa. The cost of the emergency measures being proposed for the NHS will amount to a few hundred million pounds, a price worth paying if your big win is an overall majority.

As the FT is saying this morning, the Government may well be acting illegally in paying bungs to senior doctors to go back to work, but what the hec, they’ve been kicking cans down the road for many years and is it any surprise that the can they’re about to kick , will be a problem for another Government in another decade.


I have been writing blogs these past few days about the short-termism of the various parties in putting just about everything in front of sorting out the very difficult but very real problems of funding an ageing workforce.

Pension tax-relief is one of the main policy levers governments have to get people to behave as governments want.

The monstrous liabilities created by pensioners do not just fall on the DWP but on the NHS through the extra healthcare costs created by our getting older.

Pensioners can end up eating everybody’s lunch and what the Government is experiencing today in the NHS is only the start of it.

What the craziness described by the FT  is actually about is the failure of 2015, 2016 and the intervening period where this problem was constantly being flagged.

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We have a lot to thank Dr Nitin Arora for – he should be remembered at this time. If this Government had listened to him earlier, they would not be in the pickle they are in today.

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About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in advice gap, age wage, NHS, pensions and tagged , . Bookmark the permalink.

3 Responses to On March 6th a doctor wrote about his pension

  1. Phil Castle says:

    If it’s illegal as you say Henry (civil offence), then it could also potentially be deemed a bribe which is a criminal offence.

  2. henry tapper says:

    It’s not me saying it’s illegal – it’s the FT headline. But I was told that Government’s cannot try to win votes by spending public money on new ideas while in purdah. This looks like just that

  3. Pingback: Do we ever save enough to stop work? | AgeWage: Making your money work as hard as you do

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