To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential merits of providing similar provision to NHS workers to that offered to the judiciary to mitigate against the effect of the pension lifetime allowance freeze on NHS workers.
18 May 2021
The NHS remains the Government’s key spending priority. This is why the Government is increasing the NHS budget in England from £114.6 billion in 2018-19 to £148.5 billion in 2023-24.
The Government has also provided unprecedented support during the Covid-19 pandemic. As of 3 March 2021, taking into account the significant funding announced at Spending Review 2020 and Budget 2021, total support provided for the economy is £352bn across 2020-21 and 2021-22, or around 17 per cent of 2020 GDP. The Government must make responsible decisions to ensure the process of returning the public finances to a sustainable path is not harder than it needs to be.
Pensions tax relief is one of the most expensive reliefs in the personal tax system. In 2017-18 income tax and employer National Insurance Contributions reliefs cost £54 billion, with around 60 per cent going to higher and additional rate taxpayers. 92% of individuals approaching retirement over the next 5 years will have a pension below the lifetime allowance and so will not be affected by this change.
The unique circumstances of judiciary appointments mean that it is necessary to reform their pension arrangements. Judges are not able to work in private practice after taking up office, and many judges take a significant pay cut to join the judiciary. The combination of these factors is why the Government is committed to introduce a reformed judicial pension scheme. Such a scheme would not benefit the vast majority of NHS staff, as members would receive no tax relief on their contributions.