The British Medical Association (BMA) has issued a stark warning to the new Labor government over possible changes to pension tax relief.
Members of the doctors’ union have written to Chancellor Rachel Reeves, urging her not to target key pension tax benefits or reintroduce the pension lifetime allowance in the upcoming autumn budget.
Part of the BMA’s concerns stem from rumors of plans to introduce a flat rate of tax relief for pensions or reduce cash entitlements to tax-free pensions.
Such changes, the union claims, could have devastating consequences for the NHS, potentially causing “irreparable damage”.
It comes at a critical time when the Government has pledged to reduce record waiting lists by offering 40,000 extra appointments per week.
The BMA fears that poorly designed pension tax reforms could derail these plans before they even begin.
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Rachel Reeves could potentially target pension tax relief in next BudgetPA/GETTY NEWSDr Vishal Sharma, chair of the BMA pensions committee, has expressed serious concerns about the potential changes. He said: “Mistaken changes to pension taxation could completely derail these plans before they have even started. »
Sharma pointed out that the existing tapered annual stipend is already impacting the ability of senior doctors to take on additional work.
He warned: “Some of the potential changes suggested could result in doctor retirements on an unprecedented scale. »
The BMA highlighted that after years of doctors being forced to reduce their workload or leave the NHS due to pension tax policy, further damaging changes would be devastating.
Sharma concluded: “The last thing the NHS needs is further damaging change. » The BMA’s concerns are echoed by AJ Bell, a leading investment platform.
AJ Bell CEO Michael Summersgill has written to Chancellor Reeves to propose a “pensions tax lock” to provide long-term stability for savers.
The proposal would see the government commit to no changes to pension tax breaks or reductions in tax-free cash entitlements for an extended period, at least until the end of the current parliament.
The suggestion comes amid growing uncertainty in the pensions sector, with reports of increases in contributions and the number of people accessing their pension funds.
Doctors issue warning over impact of Reeves’ plans
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Tom Selby, director of public policy at AJ Bell, explained: “Uncertainty over the future of pension tax incentives is already having real-world consequences, with increases in contributions and the number of people accessing their funds pensions reported in the pensions sector. .”
Selby warned that making long-term financial decisions based on budget fears could leave people worse off in the long run.
The pensions expert called for “a strong commitment to ensuring the stability of the pensions tax system, rather than pursuing misguided reforms which would be complex, unpopular and could lead to a new round of public sector strikes “.
A UK government spokesperson said: “We do not comment on speculation about tax changes outside of tax events. »
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