The British Medical Association (BMA) has issued a stark warning to the new Labour Government regarding potential changes to pension tax relief.
Members of the doctors’ trade union has written to Chancellor Rachel Reeves, urging her not to target key retirement tax perks or reintroduce the pensions lifetime allowance in the upcoming Autumn Budget.
Part of the BMA’s concerns stem from rumoured plans to introduce a flat rate of pension tax relief or reduce pension tax-free cash entitlements.
Such changes, the union argues, could have devastating consequences for the NHS, potentially causing ‘irreparable damage’.
This comes at a critical time when the Government has committed to reducing record waiting lists by providing 40,000 additional appointments per week.
The BMA fears that ill-conceived pension tax reforms could derail these plans before they even begin.
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Dr Vishal Sharma, chair of the BMA pensions committee, expressed grave concerns about the potential changes. He stated: “The wrong changes to pension taxation could completely derail these plans before they have even started.”
Sharma highlighted that the existing tapered annual allowance is already impacting senior doctors’ ability to take on additional work.
He warned: “Some of the potential changes that are being suggested could result in doctors retiring on an unprecedented scale.”
The BMA emphasised that after years of doctors being forced to reduce workloads or leave the NHS due to pension tax policies, further detrimental changes would be devastating.
Sharma concluded: “The last thing that the NHS needs is further detrimental changes.” The BMA’s concerns are echoed by AJ Bell, a leading investment platform.
AJ Bell’s CEO, Michael Summersgill, has written to Chancellor Reeves proposing a ‘Pensions Tax Lock’ to provide long-term stability for savers.
This proposal would see the Government commit to not altering pension tax relief or reducing tax-free cash entitlements for an extended period, at least until the end of the current Parliament.
The suggestion comes amidst growing uncertainty in the pensions industry, with reports of increases in both contributions and the number of people accessing their retirement pots.
Doctors have issued a warning about the impact of Reeves’s plans
PA
Tom Selby, Director of Public Policy at AJ Bell, explained: “Uncertainty over what will happen to pensions tax incentives is already having real-world consequences, with increases in both contributions and the number of people accessing their retirement pots reported across the pension industry.”
Selby warned that making long-term financial decisions based on Budget fears could leave people worse off in the long run.
The retirement expert advocated for “making a firm commitment to delivering stability in the pensions tax system, rather than pursuing ill-advised reforms that would be complex, unpopular and potentially result in another round of public sector strike action.”
A UK Government spokesperson said: “We do not comment on speculation around tax changes outside of fiscal events.”
