Matt Hancock vows to axe 'unfair' pension rules amid claims top NHS staff forced to cut hours
Ministers have promised to scrap "unfair" pension rules brought in by George Osborne amid warnings they are penalising NHS staff for taking on extra work.
Higher earners are currently hit by an additional tax if they put more than £10,000 a year into their pension - a move that the British Medical Association has warned is forcing consultants and family doctors to consider early retirement and cut their hours.
It has also led to staff shortages and longer waiting times as senior doctors refuse to take on extra hours.
Health Secretary Matt Hancock said a "major overhaul" of the so-called annual allowance taper - brought in under former Chancellor Mr Osborne - was now needed.
Writing in The Telegraph, the Cabinet minister said the rules meant senior staff were "disincentivised from taking on extra shifts and face unexpected tax bills because they can’t control their pension contributions".
Mr Hancock added: "The way the system works at the moment, doctors and some nurses in certain circumstances have to pay to do overtime. They actually earn less, overall, if they work more.
"This is obviously unfair and completely counterproductive. It doesn’t work for anyone - not for those doctors and nurses, and not for the NHS which relies on their overtime and flexibility to keep the show on the road. We have promised action, and today we are delivering."
The Health Secretary said that under the new system clinical staff will given "full flexibility over the amount they put into their pension pots" to stop them triggering the levy - with a wider Treasury review also looking at the tax itself to see if it can "better support vital public services like the NHS".
The plan will be set out in a consultation over the summer, with a view to bringing in the changes in April.
The Government is also pledging to let doctors opt out from the current pension scheme in the existing financial year to avoid them being hit by existing rules.
Dr Chaand Nagpaul of the British Medical Association said: "We acknowledge this step forward by the government."
He added: "After tireless lobbying on the damaging effect that perverse and ill-thought out tax legislation is having on our NHS, its doctors and patients, it is good to see the government finally sitting up and taking notice and proposing action."
Shadow Health Secretary Jonathan Ashworth said doctors had "long been warning that George Osborne’s pension changes have undermined their ability to provide the care patients deserve".
The Labour frontbencher added: "The truth is cuts and ministerial incompetence have left the NHS struggling to cope with 100,000 staff shortages.
"It is patients who are suffering the consequences with growing waiting lists and cancelled operations. Ministers need to do significantly more to provide the NHS with the staff it needs now and for the future."