Offering special concessions to NHS professionals may address concerns over early retirements there, but should pension rules vary by occupation?
Doing so would create both complexity and unfair comparisons with those affected in other professions.
So what’s the solution?
One approach offered by some employers in the private sector is to allow individuals affected by this to swap future employer pension contributions for an increased income.
We are keen to see this extended to those in the NHS scheme and other public sector employments.
Interestingly, this appears to be the approach being taken by NHS Scotland.
This is not a simple exercise, leading to someone on Twitter suggesting doctors will have to become ‘mini actuaries’. Of course, a far more palatable solution is to seek advice.
But even this solution detracts from that simple starting point that saving for your retirement is a good thing and should be seen as such.
All Governments have budgetary constraints to live within, and they need to make sure the tax system is fair across wealth bands.
But when pension tax rules become so complex that they discourage doctors from taking on extra work, then something has gone very wrong.
It is time to take a step back and make sure the pension tax system does what it was intended to do and that’s incentivised people to save more, not less, for their retirement.
So, rather than rearranging the deckchairs, what we need is a fundamental review of how pension allowances work, not just for the NHS, so they reward good savings behaviour and never penalise taking on extra work.
Steven Cameron is pensions director at Aegon
