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£750m cost of backdated GP pensions sunk deal

Ministers refused to give GPs an increase in pensions backdated to 1990 because it would have cost the Treasury £750 million, Pulse has learned.

A backdated increase in the dynamisation factor was one of the GPC's key demands because it would have closed an 11 per cent gap between GPs' pay and superannuable income.

Mike Farrar, the NHS Confederation lead negotiator, told Pulse the change had been too expensive for the Government to agree. He said the confederation's actuaries believed other changes to the GP pension would mean it was comparable with consultants and close the gap between GPs' actual and pensionable income.

BMA actuaries disagreed, saying GP pensions would still lag behind.

Dr Simon Fradd, GPC lead negotiator on pensions, said he was disappointed to not

get either the increase in the accrual rate or backdated dynamisation, but insisted the pensions deal was a 'curate's egg'.

He added: 'It's easy to think that just because the two headline issues were not achieved that it's a disastrous deal.

'I did everything I could to persuade the Government, but I couldn't get it. But we must not lose sight of what benefits we have secured.'

The GPC has calculated the accrual rate for GPs' pensions will rise from 1.4 per cent to 1.5 per cent because they can include the first four years of pre-practitioner work.

It originally demanded an increase to 1.6 per cent.

GP accountants will have to work out a practice's net profits after expenses at the end of the financial year to calculate pensions under the contract.

All net profit will be pensionable, resulting in a 25 per cent uplift in dynamisation over the next three years, the contract states.

Arthur Dixon, senior manager, private clients, at accountants Deloitte & Touche, said GPs would have to wait for months at the end of each year before they knew how much income was pensionable.

How will the pensions deal influence your future plans?

E-mail your views to Pulse@cmpinformation.com

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