Pension tax rules to be suspended for public sector workers coming back to fight coronavirus

Linda J. Dodson

Crippling pension tax rules could be suspended for public sector pensioners who have returned to join the fight against coronavirus after the Government said it would ensure they do not lose out.

The change will scrap rules that normally apply a tax charge to pension income for recently retired workers aged between 50 and 55.

The rules were first nullified for nurses and doctors and will now be extended to all public sector workers, according to John Glen, the economic secretary to the Treasury.

Mr Glen said he was working to remove any barriers to those who wish to return to work to help during the pandemic.

He said: “It is important that key public sector departments can bring back workers with relevant and valuable experience to ensure the Government can continue to provide critical public services.”

Under the Coronavirus Act 2020, NHS pension schemes removed rules that suspended or reduced pensions if someone returned to work.

Retirees who receive a pension but return to work and earned a salary on top can be pushed into higher income tax bands. This usually triggers an “abatement”, which is a  pound for pound reduction in the pension if their new earnings exceed their pre-retirement NHS salary.

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