Question to the Department of Health and Social Care:

To ask the Secretary of State for Health and Social Care, pursuant to the Answer of 21 March 2023 to Question 166290 on Doctors: Workplace Pensions, what estimate his Department has made of the financial benefit to doctors expected from the policy to remove the lifetime allowance on pension savings.

Pension benefits in the legacy National Health Service scheme at the previous lifetime allowance (LTA) provide an annual pension of around £46,000 plus a tax-free lump sum of around £138,000. The removal of the LTA means that NHS clinicians can continue building their pension tax-free beyond this level, without further accrual being limited by 25% if taken as annual pension or 55% if taken as additional lump sum.

Retirement is a personal decision, and it is not possible to identify the impact of a single factor. The changes announced at Budget will ensure that the vast majority of doctors in the NHS are not disincentivised from remaining in roles and taking on extra hours, as pension tax is no longer a trigger event for retirement. The financial benefit of the changes is different for individual doctors depending on their earnings, pension accrual, and circumstances.

In 2021/22, 2,074 NHS Pension Scheme members retiring in that year incurred £93.6 million of LTA charges, indicating an average tax charge of £45,000. 88% of this group were senior hospital and primary care clinicians. This is indicative of the additional pension benefits high-earning NHS Pension Scheme members might receive as a result of the abolition of the LTA. However, this excludes the impact of the LTA on those who retired or opted out of the scheme to reduce their LTA liability.