The number of NHS staff opting out of their pension scheme to avoid tax charges increased by nearly 10,000 in the 2019/20 tax year, according to Quilter.
A Freedom of Information request from Quilter showed that 50,399 people opted out, the highest number reported over the last four tax years. In total, close to 180,000 staff have chosen to opt out since the 2016/17 tax year.
Many of those who have opted out will also be opting back in again, as a way of reducing pension growth for the year to avoid being hit by the annual allowance tax charges.
Some will also be looking to mitigate against breaching the lifetime allowance, which was frozen at £1,073,100 in the most recent budget, Quilter said.
Graham Crossley, NHS pension specialist at Quilter, said: “This data adds to the argument that we need to take a very careful look at the current pension tax system for the public sector and see whether it is still fit for purpose.
“The NHS has played a huge role in helping the country keep going during the pandemic and it’s worrying and sad to see that in last tax year significantly more people in the health service felt that leaving the NHS pension scheme was their best option due to a complex tax system that penalises the right behaviours.
“Opting out of the scheme may not be the best course of action and can have a serious impact on someone’s pension provision, as well as their family’s financial protection, so is therefore not a decision to be taken lightly and it is worth first seeking professional financial advice.”