Less of the hyperbole. Wealthy people don't bother with pension funds as they just arne't attractive investment vehicles.Originally Posted by az city
The driving force was doctors tend to retire earlier. Medical professionals are on final salary schemes, which have to be converted to cash equivalents for the purpose of tax. Given low gilt rates, annuities have fallen meaning pension funds need to be higher in value to achieve the same outcome. Doctors on salaries of £100k per annum have almost £30k per annum put into a pension fund by their employer. This quickly adds up and after 25 years paying into a fund, so when they are 50 or thereabouts, their pension fund is greater than the lifetime allowance. As any surplus payments are taxed at 55%, this means doctors would receive a tax charge £16.5k on the £30k contribution made by their employer. This tax has to be paid immediately, and as you can imagine many are not happy to have to pay this. Hence doctors leave the NHS and go private, or retire.
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