Doctors stampede towards early retirement after bumper pensions axed

The number of doctors taking early retirement has tripled since the axing of bumper pensions, an investigation by the British Medical Journal (BMJ) has revealed. 

Official NHS data show that 1,358 GPs and hospital doctors retired early in 2020-21 – up from 401 in 2007-8.

The trend follows a clampdown on pensions, introduced in 2012 by George Osborne, then chancellor, capping the amount savers can amass without being taxed from £1.8 million to £1 million.

The new figures, obtained by a freedom of information request by the BMJ, come from the NHS Business Services Authority.

Separate data show that more than 50,000 NHS workers quit the NHS pension scheme in 2019-20, in order to avoid major tax bills. 

The number of staff opting out of the scheme rose 22 per cent during the tax year, with senior doctors and managers saying they had no choice to avoid large tax bills. 

NHS pensions: ‘I’m scared of getting a shock tax bill’

The British Medical Association (BMA) said changes in tax regulation were one of the main reasons doctors were choosing to retire early. 

The data show the average age of retirement fell during this period, from 61 to 59. And the number retiring because they had reached retirement age fell from 2,030 in 2007-08 to 1,594 in 2020-21.

However, the total number of doctors employed by the NHS in England and Wales rose by one quarter over the 13-year period, from 141,000 to 176,000.

Vishal Sharma, the chairman of the BMA pensions committee, said that the current pension taxation system was “punitive” and left “senior doctors with little option but to consider early retirement”.

He added: “To make things worse, we know that the strain of working through the pandemic has left doctors exhausted and they continue to battle stress and burnout.

“Many have had their annual leave cancelled and they have not had adequate time to rest and recover from the tumultuous year they have had, with no sign of let up as they now face the biggest backlog and waiting lists since records began.

“The BMA demands that urgent action is taken to halt a potential workforce crisis at a time when the NHS can least afford to weather it.”

Dr Sharma said the situation had been made worse by the Government’s decision to freeze the lifetime allowance for pensions taxation for the next five years, which will increase the amount of tax that many doctors have to pay on their pensions. 

“A BMA survey demonstrated that 72 per cent of doctors would consider retiring even earlier as a result of these changes,” he added. “The combination of an exhausted workforce coupled with the freezing of the lifetime allowance being imposed at the same time will potentially result in a mass exodus of highly experienced doctors, at a time when patients need them the most.”

He said that a “simple but effective” change that the Government could make would be to implement a tax unregistered pension scheme in the NHS. 

“The Government has already implemented such a scheme for the judiciary to address similar recruitment and retention issues,” he explained. “A comparable solution within the NHS will allow our most experienced doctors to remain working in the NHS and consequently avert this workforce crisis.” 

On Wednesday, health leaders said the NHS workforce is “incredibly tired” after working full pelt throughout the pandemic.

A poll from the NHS Providers organisation, which represents NHS trusts, found many health leaders have seen staff leave due to early retirement or side effects from working through the coronavirus crisis.

The survey of NHS leaders in England found almost half have seen evidence of staff leaving their organisation due to early retirement, Covid-19 burnout, or other effects from working in the pandemic.

Saffron Cordery, the deputy chief executive of NHS Providers, told BBC Breakfast: “I think one of the key challenges is also amongst the NHS workforce, which is incredibly tired. Our survey found nearly half of trusts had evidence of staff leaving the NHS because of either early retirement, burnout, or the impact of working in a pandemic environment. And we know that there’s more of that really tough work to come.”

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