£2,500 extra each year to make your pension stand still
GPs in England and Wales will have to pay around £2,500 a year more to earn the same pension under proposed reforms to the NHS scheme.
The plans unveiled this week also limit future rises to GP pensions by scrapping the lucrative GMS contract agreement which links annual pension uplifts to GPs' average earnings.
From 2008, the 'dynamising factor' – which was 12.6 per cent for the first year of the contract – will instead be capped to inflation plus 1.5 per cent.
Health sector unions including the BMA agreed the changes in order to fight off Government plans to raise the retirement age for existing pension scheme members from 60 to 65.
Under the deal, GPs who earn more than £100,000 a year will be required to contribute 8.5 per cent, up from 6 per cent. Those earning £60,880 to £100,000 will pay 7.5 per cent.
Employer contributions will be pegged at 14 per cent.
The accrual rate, which ensures GPs' pensions rise in
line with other scheme
members on a final salary pension, remains at 1.4 per cent.
New flexibilities remove the upper limit on personal contributions and GPs will be able to take 25 per cent of their pension as a lump sum.
From December 2007, new entrants will have to work until 65 but their accrual rate rises to 1.87 per cent.
Those GPs will also be able to draw pensions while still working; to protect their pension if they move into a lower-paid job nearer retirement and to return to work after retirement and rejoin the scheme.
Doctors will have a one-off opportunity to move from the old to the new scheme.
Dr Andrew Dearden, chair of the BMA's pensions committee, said increased GP contributions were 'fair and morally right' as high earners' returns were far greater than low earners'.
The dynamising factor formula had to change because the old mechanism resulted in an 18-month delay in its calculation and because 'the financial screws had come down', he added. Dr Dearden said: 'It's time to go back to a more stable arrangement.'
Some GPs were irritated that the scheme they had signed up to was being changed.
Dr David Lloyd, a GP in west London, said: 'They only change the rules to claw money back or to get more out of us.'
But Dr Chris Udenze, a GP in Nottingham, said it was 'reasonable' for GPs to pay more.
How GPs are affected
• Personal contributions 7.5 per cent for GPs on £60,880 to £100,000, 8.5 per cent for those on over £100,000
• Dynamising factor to be retail prices index (RPI) plus 1.5%
• Retirement age 60 for existing members, 65 for new
• No upper limit on contributions
• Option to take 25% lump sum
• Survivor rights extended to non-married and civil partners