Health secretary Steve Barclay wrong to claim NHS consultants receive tax-free pensions

“Consultants, when they retire now at 65, will get a tax-free pension of £73,000 a year”

Speaking on the BBC Today programme earlier this week, health secretary Steve Barclay claimed that NHS consultants get a tax-free pension. 

This is incorrect, as pensions are considered a form of income and are therefore subject to tax rules like other forms of income. This means tax is due on any sum above an individual’s personal allowance. 

If an MP makes a false or misleading claim on broadcast media they should take responsibility for ensuring it is appropriately corrected, and make efforts to ensure the correction is publicly available to anyone who might have heard the claim, e.g. by issuing a correction on social media or, if a Minister, publishing a note on the Government website, and by ensuring the broadcaster is made aware of their error. It is an MP’s responsibility to take reasonable steps to prevent anyone else from being misled by their claim and to ensure anyone who already heard the claim is aware that it has subsequently been corrected.  

After we first published this fact check, a spokesperson for the Department for Health and Social Care (DHSC) said Mr Barclay’s comments had conflated two separate issues relating to pensions and the department was happy to correct the record. 

Lump sum

In a series of posts on Twitter responding to Mr Barclay’s comments, the British Medical Association (BMA) said the claim that consultants received tax-free pensions was “categorically not true” and called for the minister to issue an urgent correction. 

A spokesperson for the NHS Business Services Authority (NHSBSA) told Full Fact: “NHS pensions are subject to tax. If members receive or take a one-off lump sum payment in addition to their monthly pension benefits, some of the lump sum payment may be tax free.

“The actual amount of tax free lump sum available at retirement will depend on the member’s individual circumstances and may be higher if they hold certain types of protection or have a protected lump sum from HMRC, or lower if they already have benefits in payment (either from the NHS Pension Scheme or another pension provider) which reduces their available lifetime allowance.”

Under current legislation, individuals are usually entitled to claim up to 25% of their total pension as a tax-free lump sum, but this is a one-off payment and does not apply to the remaining pension paid out each year. 

Conflicting figures

It is unclear where Mr Barclay obtained the figure of £73,000 which he used during his radio appearance. The sum is significantly higher than the “£60,000-plus” pension Mr Barclay quoted in an article for The Sunday Times on 16 July 2023. He also quoted a slightly higher figure of £78,000 in the Mail Online on 10 August. 

A spokesperson for the BMA told Full Fact that it was “misleading” to suggest the figure of £73,000 was typical, as “pensions are highly individual and will depend on factors such as retirement age, working patterns etc.”

The NHSBSA added: “We are unable to provide an average or typical pension payment amount for consultants as there are many factors, including working patterns and length of membership that will affect the amount paid.”

A DHSC spokesperson said: “A newly-qualified consultant who retires at 65, having worked full time throughout their career, could expect to receive an inflation-proofed pension of around £78,000 per year.

"After listening to the BMA’s request for reform to incentivise consultants [to] carry on working in the NHS rather than take early retirement the government changed the annual allowance for tax-free pension saving, increasing it by 50 per cent to £60,000, and removed the £1 million lifetime cap.

"These two issues were conflated in a recent broadcast interview and we are happy to correct the record.”