It is well known that one of the key accelerators of early retirement for both GPs and Consultants is the progressive reduction in the LTA Cap.
The lifetime allowance is a cap on the amount that can be built up in pension pots, amounts over and above which are hit by a punitive tax charge when benefits are taken. The lifetime allowance was first introduced in 2006 under Gordon Brown’s tenure as Chancellor, initially set at £1.5 million and rising annually to a peak of £1.8 million April 2010.
However, it was subsequently cut aggressively by George Osborne. From 6 April 2019, it will be £1.055 million, a decline of over 40% in eight years. The LTA affects many professionals, including GPs and senior NHS staff, whose final salary schemes exceed the limit, as well as those who have diligently saved into their pensions over the years.
Mr Hancock has said GPs are choosing to retire early as they are no longer getting any value from their pension contributions.
The Health Select Committee has identified that 60% of NHS Consultants now intend to retire before 60, and that the average retirement age for GPs has fallen in the last 5 years from 64 to 58.8.
Dr Sarah Wollaston has written to the Chancellor asking for this cap to be altered to help recruitment and retention (22 February 2019) and perhaps unsurprisingly the Chancellor has noted the issue but also stated that the allowances already given for pension tax relief cost the UK economy £50bn each year and no changes are planned – another added pressure for retiring GPs.
GPER can help make the decision to retire less worrying and concern and retiring becomes a much less stressful process.