Doctors are preparing an 'exodus' from the NHS if Labour slashes tax-free amount that savers can withdraw from their pension pots, Rachel Reeves was warned last night.

Two unions told the Chancellor that any such move would see waiting list rising while simultaneously sparking fresh strikes.

They also accused the Government of trying to 'claw back' the money it lavished on inflation-busting pay hikes for doctors and other public sector workers.

It comes after reports that the Chancellor is considering whether to cut the tax-free lump sum to just £100,000.

At present, most savers can take 25 per cent of their pension pot tax-free once they reach the age of 55, up to a maximum of £268,275. Experts project that £2billion could be raised by the move.

But under a pension scheme introduced in 1995, NHS workers are forced to receive part of their pension pot as a lump sum upon retirement.

For the most senior doctors with the largest pension pots, this could mean being forced to accept over £100,000.

It means many would potentially retire early to avoid the lump sum they would be forced to accept exceeding this new threshold or to prevent more of it being taxed.

More recent pension schemes introduced do not force NHS workers to accept a lump sum from their pot.

Dr Sarah Tennant, pensions spokesman for the Hospital Consultants and Specialists Association union, said: 'Slashing the tax-free lump sum will cause turmoil among senior hospital doctors.

'While younger doctors can opt not to take a lump sum, older doctors will be in a scheme which forces them to.

'It doesn't take much to see how the threat of losing thousands in deferred pay would drive many of our most experienced doctors to avoid the change by retiring earlier than planned.'

She added: 'There will be huge anger and there's every prospect this could bubble over into renewed impetus for strike action, which no-one wants to see.

'This is all at a time when our NHS is in dire straits and needs every pair of hands to get through the waiting list backlog.'

In March 2023, the Chancellor Jeremy Hunt abolished the amount people could hold in their pensions tax-free, known as The Lifetime Allowance, in a bid to stop senior doctors from retiring early.

It means some doctors have remained working in the belief that they can increase their pension pots without facing punishing new levies.

Under the pensions lifetime allowance Mr Hunt abolished, pension pots over £1.07million faced an annual tax of £40,000 on average.

Dr Vishal Sharma, pensions committee chairman of the British Medical Association, said any new raid could 'severely undermine ongoing efforts to reduce waiting lists', adding: 'We are hearing that some doctors have already brought forward their retirement plans due to ongoing speculation and if such a move is announced this would likely result in an exodus of our most senior doctors, with them making immediate plans to retire before any changes take force.

'After a number of pay deals that began the process of restoring lost pay were reached for doctors earlier this year, clawing back this money from our pensions would not only reverse this progress but could result in a resumption of the disputes we have seen across the NHS.'

Dr Sharma added: 'For doctors in the 1995 pensions scheme, they receive an automatic, mandatory lump sum meaning they could be left with no option but to pay tax charges they were not expecting.'

The warning is a severe blow to Labour, which pledged in its manifesto to 'get a grip' on waiting lists by clearing them.

New NHS figures published yesterday showed waiting lists flatlining at around 7.6million.

Ms Reeves is also considering whether to introduce a National Insurance tax on employer pension contributions to help deliver the party's unfunded pre-election spending pledges.

On Wednesday, economists at the Institute for Fiscal Studies said Ms Reeves needed to find £25billion from tax rises to avoid spending cuts and to meet her pledge to borrow only to invest.

Yesterday, Business Secretary Jonathan Reynolds failed to rule out the prospect of National Insurance contributions on employer pension contributions.

John O'Connell, chief executive of the TaxPayers' Alliance, said: 'Taxpayers will be deeply concerned about the increasingly desperate nature of this government as they scrabble around for cash.

'Labour should focus more on easing the burden on households and businesses and less on trying to squeeze every last drop out of them.'