As inflation rips into living standards, everyone is feeling the pinch and many are looking for help. Some people are asking for more from the state. That really means help from their fellow taxpayers, because sooner or later, that’s where public money comes from.
We all have our own views about which groups merit that help: working-age parents in the lowest income bracket are at the top of my list. Readers will doubtless have their own thoughts on which marginalised and disadvantaged people are most deserving.
Amid the tumultuous national conversation about the cost of living, there’s always a danger that some unfortunate souls might be overlooked. So, I’d like to use this article to draw attention to the plight of people whose economic struggle and case for more support from the Exchequer might have escaped your attention as you wonder if you can afford to pay the gas bill and go on holiday this year.
The people I’m talking about are struggling too. Economic circumstance and austere public policy mean some feel driven to just give up. They face the grim prospect of retiring in their 50s and trying to eke out their remaining years trying to get by with pensions worth little more than £1 million.
I know this is difficult and potentially upsetting, dear reader, but try to imagine what it must be like to be 50-something with a pension pot worth close to £1,073,100. That pot is likely to yield a lump-sum payment of more than £150,000 on retirement, followed by an annual income of close to £50,000 for the rest of your days.
To be clear, hitting the £1 million limit isn’t a rare thing for doctors: it’s a common concern for medics
Now, it’s possible that some of you might be thinking ‘that doesn’t sound too bad, actually’. Perhaps you’re aware that the typical private pension pot is worth barely £50,000 and will deliver an annual income of a few hundred quid a month at best. Maybe you even know that barely 42,000 people a year hit that £1,073,100 level, which is the ‘lifetime allowance’ for what you can have in a pension before the Treasury impose super-high levels of tax.
So maybe those things mean you’re a bit short on sympathy for pension millionaires who are, relative to pretty much everyone else in the UK, doing quite nicely.
You probably wouldn’t expect those pension millionaires to put their hands out to ask for more from the state, especially at a time like this. Especially when you consider the socio-economic background of those pension millionaires, who are members of the most socially exclusive professional elite in Britain.
Really, imagine the howling outrage if a bunch of rich, posh people launched a campaign asking for the state to show more generosity towards them over their £1 million pensions.
Well, you don’t need to imagine, because such a campaign is indeed underway, launched recently by a trade union.
That union is the British Medical Association (BMA) and the pension millionaires it’s fighting for are doctors. The BMA has launched a low-key lobbying effort aimed at MPs, urging them to put pressure on ministers to allow doctors to amass even larger pensions. Doing so would, of course, impose a cost on the state and therefore the taxpayer, since it would entail the Exchequer forgoing the tax it would otherwise collect from doctors’ pensions.
Unless the Government eases the tax charges faced by doctors on pensions over £1,073,100, the union says, even more doctors will simply take their money and walk away into early retirement. The average age of retirement for medics is now 59 and falling.
To be clear, hitting the £1 million limit isn’t a rare thing for doctors: it’s a common concern for medics.
A BMA survey of doctors found that 72 per cent are more likely to retire because ministers have frozen the level of the lifetime allowance until 2026.
‘More and more senior NHS workers are being pushed to reduce their workloads or retire early,’ says a BMA invite to MPs to attend a pensions briefing in Parliament next week.
You might have thought the reason you can’t easily see a doctor is that medics are being driven out of the profession by intolerable workloads, or that not enough doctors are being recruited and trained. You might think that because the BMA is always vocal about such things, and rightly so, for those are indeed real issues that must be addressed.
But the union makes rather less effort to draw attention to the fact that shortages of senior doctors also arise because many of them quite literally have too much money in their pensions. The latest BMA lobbying campaign seems to have been launched without a press release or other public announcement.
Instead of bothering with the general public, the BMA is instead encouraging doctors to contact their MPs directly with a pre-written warning that the taxation of £1 million pensions will lead doctors to retire. If nothing else, such messages must add some variety to parliamentary inboxes overflowing with messages from constituents worried about paying their bills or feeding their children.
The tax treatment of large pensions is very complicated. The fundamental issues of the BMA lobbying campaign aren’t. People who have amassed pension wealth beyond the wildest dreams of most workers are asking the state to show greater generosity towards them over that wealth. If they don’t get it, they say they will give up treating patients and walk away with their £1 million pensions.
And don’t be surprised if this approach works. A government that wants to maximise the number of doctors at work realistically has few ways to address the early retirement of medics other than greater leniency on their pension bills. So, a country where real wages are falling, and growing numbers of people face real economic pain, may soon have to devote more of its resources to some of the richest members of its population. Truly, the cost-of-living crisis takes many forms.
Comments