Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether he has made an assessment of the impact of inflation on the (a) tapered annual allowance for medical pensions and (b) incentives for medical professionals to work additional hours.

The Government is committed to ensuring that hard-working NHS staff do not find themselves reducing their work commitments due to the interaction between their pay, their pension, and the relevant tax regime.

The NHS pension scheme protects pensions in payment by increasing them by CPI and revalues accrued CARE benefits by CPI+1.5% each year.

In April 2020, the Government raised the thresholds above which the tapered annual allowance applies by £90,000. As a result, no one with a net income before tax below £200,000 is now affected by the tapered annual allowance. In addition, the annual allowance only begins to taper down for individuals who also have total income (including pension accrual) above £240,000. It was estimated at Budget 2020 that these changes have taken up to 96% of GPs and up to 98% of NHS consultants outside the scope of the tapered annual allowance.

These changes allow pension savers to build significant retirement savings tax free, while also ensuring that the highest earning pension savers do not receive a disproportionate benefit from pension tax relief.