Scotland’s health secretary has unveiled a scheme to allow experienced NHS staff to carry on working without incurring big pensions tax penalties.

Jeane Freeman says eligible NHS staff will have the option to get their employer pension contributions paid to them as part of their basic pay under an arrangement that will run for four months from the start of December.

Many senior staff – mainly consultant grade doctors – faced with the risk of breaching their Annual Allowance in the current financial year and incurring an extra tax charge, were reducing their hours or taking early retirement.

Eligible staff will have the option of stepping back from the NHS Pension Scheme and receiving their employer contributions back as additional basic pay, paying tax and national insurance on the income.

Ms Freeman says she hopes the move will ensure crucial services are maintained as demand on the health service continues to increase across the winter months:

“Our hard-working staff should not face a financial penalty for working to provide vital services for patients, and I have repeatedly called for action from the UK Government on this as this matter is reserved.

“Our staff are valued and they should be supported and able to work for our NHS and its patients for as long as they wish.”

The Scottish Government says the temporary policy will not require additional funds as the NHS boards are already getting the money to pay for the pension contributions.

Ministers say the arrangement, which runs to the until the end of March 2020, is a stopgap until a UK Government review is completed.

The chair of the BMA’s Scottish Consultants Committee, Graeme Eunson, says the scheme is a step in the right direction:

“As we enter the crucial winter period it will help protect patient care, keep our emergency departments staffed and deal with challenging waiting lists. These are the vital NHS services that have been suffering as doctors are forced to cut their hours out of fear of a perverse tax system that essentially makes them pay to go to work.

“However, while we welcome this move, more fundamentally we need UK-wide tax reforms before the end of this financial year in order to prevent these bills from hitting doctors again next year. I would urge everyone who is eligible for this scheme, and who feel they would benefit from it, to get their applications in before December 1 in order to make the most of what is available to them.”

President of the Royal College of Physicians of Edinburgh, Professor Derek Bell, says, while the interim scheme is welcome, a permanent solution has to be found:

"We would ask the Scottish Government – and indeed the other devolved administrations – to continue dialogue with the UK Government about implementing flexible pension arrangements, which will give doctors the freedom to plan for their futures. But it is important to point out that the financial circumstances of each doctor are unique. Therefore, we would encourage all individuals to get professional financial advice, to address their own circumstances.”