Question to the Department of Health and Social Care:

To ask the Secretary of State for Health and Social Care, what estimate his Department has made of the potential costs and benefits of introducing a tax unregistered scheme in relation to NHS doctors' pensions.

An unregistered pension scheme would not benefit the vast majority of National Health Service staff, as they would lose the benefit of tax-relief on their contributions and a tax-free lump sum on retirement. A separate unregistered scheme for the very highest earners in the NHS would take them outside the pension tax system. It would allow members to not pay annual allowance or lifetime allowance tax charges, excluding them from the allowances for tax-free pension saving that apply to the rest of society. This would remove a barrier to the amount of additional work they can perform particularly for £200,000 plus earners affected by the annual allowance taper.

In order to make an unregistered arrangement more favourable to members than a registered scheme, a substantial subsidy would need to be provided to the reward packages of those in a scheme in the form of increased employer contributions. A subsidy of around 5% of pay would be needed to match the benefit of tax-relief on contributions, and a further subsidy of around 3% of pay would be required to provide the equivalent of a tax-free lump sum on retirement. These subsidies would require significant investment from the taxpayer in order for an unregistered scheme to work. Estimates from the Department suggest this would range from £500 million to £700 million per year, depending on take up and scheme design.