25 per cent of their pension savings<\/a> \u2013 to the value of \u00a3268,275 \u2013 tax-free, but there has been speculation that the Chancellor could cut the limit as she seeks to raise funds in her Budget.<\/p>\nThough NHS pensions work differently from most pensions in the private sector, healthcare workers can still draw a payment of up to \u00a3268,275 from their pensions. To do so, they have to retire, or partially retire.<\/p>\n
If Reeves were to cut the maximum lump sum, there is an expectation that the change would come in from the next tax year, starting in April.<\/p>\n
And experts say this could mean many senior doctors opting to take their lump sums \u2013 retiring or partially retiring \u2013 before then.<\/p>\n
Graham Crossley, an NHS pensions expert and director at Medifintech, said: \u201cIf Reeves were to cut the pension lump sum, one would assume that would be from the start of a tax year, and this would trigger significant retirements to miss being stung \u2013 and it would be understandable.<\/p>\n
\u201cAt the moment, they can take up to \u00a3268,275; if this allowance were reduced, then a lot of the new excess would likely end up being taxed at an additional rate.<\/p>\n
\u201cOnce they retire, it may prove difficult to get them to go back to work. There\u2019s the retire and return route, but that means giving up an existing contract and starting a new one, or going through partial retirement, which means they would have to reduce their pensionable pay by 10 per cent.<\/p>\n
\u201cEither way, if the lump sum allowance was reduced, it could impact NHS staffing resources.\u201d<\/p>\n
Julian Elford, a consultant radiologist with over 20 years of experience working in the NHS, said he had already taken his lump sum last year and taken partial retirement, partly in anticipation of changes by Reeves.<\/p>\n
\u201cIf I had not already partially retired and a cut in the lump sum was announced, I would definitely take the maximum lump sum and partially retire to avoid the tax. I want to be in charge of my money rather than Reeves or anyone else,\u201d he said.<\/p>\n
He added that if the lump sum had been reduced to \u00a3100,000, as suggested previously by the Institute for Fiscal Studies (IFS) thinktank, he would have faced a large tax charge.<\/p>\n
\u201cIf they make a change and there is a warning, I know basically every NHS consultant I speak to over 55 would retire or partially retire as soon as they could and draw that money now,\u201d he said.<\/p>\n
Jonatha Halberda, specialist financial adviser at Wesleyan Financial Services, said some doctors had taken their lump sums last year in the lead-up to the previous Budget, in reaction to speculation about lump sum changes that did not end up coming to fruition.<\/p>\n
\u201cIt\u2019s understandable that people are anxious about what might happen, but the challenges doctors faced after acting on speculation last time show why it\u2019s so important to wait for the facts,\u201d he said.<\/p>\n
\u201cHowever, there are real implications for the NHS workforce if doctors feel compelled to take their lump sums ahead of any rumoured change,\u201d he added.<\/p>\n
In the run-up to last year\u2019s general election, the Labour Party pledged to cut NHS waiting times.<\/p>\n
Waiting times are down since the election, though any policy that were to take doctors out of the workforce would likely make it more difficult to continue meeting the pledge.<\/p>\n
HM Treasury spokesperson said: \u201cWe do not comment on speculation around tax changes, but remain committed to encouraging pension saving.<\/p>\n
\u201cPension savers already benefit from around \u00a378 billion a year in tax reliefs as the majority pay no tax on their contributions.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"At the moment, people can take \u00a3268,275 tax-free from their pension pot – but there have been calls…\n","protected":false},"author":2,"featured_media":110748,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[177],"tags":[79,18,19,17,1565,2090,234,235,3887],"class_list":{"0":"post-110747","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-eire","10":"tag-ie","11":"tag-ireland","12":"tag-nhs","13":"tag-pensions","14":"tag-personal-finance","15":"tag-personalfinance","16":"tag-retirement"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/110747","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=110747"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/110747\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/110748"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=110747"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=110747"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=110747"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}