What’s the issue?
For many higher-earners, the current system of taxing pension savings is being seen as providing an incentive to do less work, to seek early retirement or to withdraw from saving for retirement.
At present, the NHS Pension Schemes offer members a range of options to build up more pension than the standard amount, but no facility to build up a lower NHS Pension; other than for people who decide to periodically opt-in and out of pension saving.
In June 2019, the Department of Health and Social Care (DHSC) announced that they intend to consult on bringing in flexibility under the NHS Pensions Scheme in England and Wales.
However, this flexibility is initially targeted at higher-earning clinicians.
Secretary of State for Health, Matt Hancock made an announcement in over the amount they can put into their pension pots.
In response we wrote to Mr Hancock, and told him that dentists are also facing the same five-figure pension tax charges as our medical colleagues and that consistency is needed, and fast.
In September 2019, the DHSC launched a new consultation on three planned key new flexibilities for senior clinicians on taxes on pensions. If implemented, such staff would be able to choose at the start of the tax year how much their pension pot should grow by and adjust their contributions accordingly.
We await to see if dentists will be included in any of these proposals, and we remain concerned that by targeting access to flexibility, the DHSC is opening itself up to legal challenges from members who will not be able to access these flexibilities.
We continue to ask for a fairer deal for dentistry, no dentist should lose out on their pension simply for working hard to ensure NHS patients have been treated.
What can you do?
We want to gather dentists’ views on their experience of pensions tax - please fill out our survey before 27 September 2019.
We believe that reform is needed and we will be making this case strongly to the DHSC, but we need your views to help us show it’s an issue that needs to be tackled.
We have launched a survey of our member dentists and we will use your responses to feed into our response to the DHSC’s consultation.
What is the BDA doing?
We have been driving some of the key developments within the NHS Pension Schemes to help dentists mitigate against facing a huge tax bill.
We have consistently raised the need for the NHS Pension Schemes to offer members a facility to voluntarily build up a lower level of pension in exchange for lower contributions.
More information: FAQs
The current system for taxing pensions saving in the UK is incredibly complex. For dentists – and even financial advisors - the Annual Allowance and Lifetime Allowance rules are confusing and have left many dentists facing huge tax bills. Read our FAQs
for more information about the Annual Allowance and Lifetime Allowances, opting-out of the NHS Pensions Scheme, what happens if you are planning on retiring soon, potential changes to the tax system and the NHS Pension Schemes, and other useful information.
Despite all of the issues with pensions tax, it is important to remember two fundamental things – that saving into a pension scheme is a positive, and generally tax-efficient, way to provide financial security for old age; and that the NHS Pension Scheme remains among the best vehicles around offering guaranteed incomes and generous contributions from Governments.
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