The British Medical Association (BMA) has said that “fundamental pension taxation reform” is the only long-term solution to the ongoing tapered annual allowance issues.

In a statement from BMA consultants committee deputy chair, Vishal Sharma, the association has described the annual allowance as “completely unsuited” to defined benefit (DB) schemes as pension growth is not within the members' control.

Sharma added: “BMA believes the best long-term solution is to scrap the annual allowance completely in defined benefit schemes such as the NHS”.

While acknowledging the role that the annual allowance can play in limiting tax relief for defined contribution (DC) schemes, the BMA have disputed this in the case of DB schemes.

Sharma explained that tax relief is “already limited by the lifetime allowance”, a view which is also supported by the Office of Tax Simplification.

Furthermore, BMA has argued that the annual allowance is an “important consideration in addressing the current significant gender pensions gap".

Sharma concluded: “The BMA has led the campaign for pensions taxation reform and will urgently engage with the next government to ensure this is achieved as soon as possible.”

Commenting on the BMA statements, Quilter head of retirement policy, Jon Greer, said: “It is clear the annual allowance is not fit for use.

"In fact the creation of the disastrous tapered annual allowance was meant to pay for the residence nil rate band, helping homeowners burdened with the threat of IHT, while maintaining pension savings incentives for all but the highest earners.

“That is not what has transpired. Not only have IHT receipts continued to skyrocket, but the tapered annual allowance has punished hard working doctors and other senior public services employees.”

The BMA comments follow the announcement of an emergency interim plan outlined by NHS England, which would allow pension tax bills to be paid through the ‘scheme pays’ option.

Commenting on these plans, the BMA stated: “While this may provide important relief for some doctors, the BMA and NHS England and Improvement are clear that this is only an emergency mitigation and must be accompanied by long-term pension taxation reform.”

Greer added: “As the election enters its final few days politicians continue their desperate attempts to win over voters by promising to fix the major problems facing the nation. The issue is these promises lack substance and we need a long-term solution.

“However, with the government due to pay back billions because of the 2015 pension scheme court case and call for the taper to be scrapped it will need to find some way to balance the books when it comes to public sector pensions.”

The comments from BMA also follow a statement from the Forces Pension Society, which argued that “any long-term solution for the NHS or other public services should be equally applicable to members of the Armed Forces.”

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