Department of Health to renegotiate GP pensions in the New Year
By Ian Quinn
Exclusive: GPs will have to pay more into their retirement pots from 2012 onwards under a Government overhaul of NHS pensions to begin with talks in the New Year, Pulse can reveal.
Ministers are set for a potentially huge confrontation with the profession after signalling that they plan to renegotiate the NHS Pension Scheme on the back of the inquiry into public-sector deals being led by Lord Hutton.
The Department of Health is to open discussions with the BMA and other bodies at the start of next year and plans to implement ‘progressive' increases in GPs' employee contributions from 2012 through to 2014. It said changes to the scheme, which in recent years has already been subject to reforms requiring higher contributions from GPs, would be announced in April's budget.
The haste with which ministers are acting on Lord Hutton's review has shocked GP leaders, who have warned of massive opposition from the profession.
Last week, in evidence to the NHS Pay Review Body, the DH said the Government had found a ‘clear rationale for public servants to make a greater contribution if their pensions are to remain fair to taxpayers and employees'.
A DH spokesperson told Pulse final details would be determined by the Hutton report, but initial negotiations would begin next year, with meetings between the NHS Pension Scheme governance group and the NHS Pension Scheme technical advisory group, which includes the BMA: ‘Details of the progressive changes to the level of employee contributions proposed for introduction from April 2012 will be announced following engagement with public-service schemes and trade unions.'
Dr Andrew Dearden, chair of the BMA's pensions committee, said GPs would feel particularly angry because their contributions had already been increased to 8.5% for higher earners, compared with 5% for lower-paid scheme members: ‘If the Government isn't careful, it is going to make the scheme so unattractive high earners will come out and throw the whole thing out of balance.'
He added that the NHS Pension Scheme was running a surplus of around £1bn a year: ‘At the moment, around £7-8bn goes in each year and £6bn comes out. How do you justify increasing contribution rates?'
But GPs receive among the highest public pensions in the country, and are being warned there is little chance of escaping the Government crackdown.
Bob Senior, chair of the Association of Independent Specialist Medical Accountants and director of medical services at RSM Tenon, warned GPs might be forced to switch to the newer 2008 NHS Pension Scheme, which has a retirement age of 65: ‘If the Government changes terms for future earnings, it may be massively unpopular – but it will argue it cannot afford these pensions. But if it tries to force GPs to stay on until 65, there will be protests making the student demos look tame.'
The looming battle came as the Government admitted thousands of GPs will be hit by a crackdown on pension tax relief. It is to reduce annual tax-relief allowances from £250,000 to £50,000 from April.
Dr Dearden said: ‘For some people it will be £5,000 to £10,000 extra tax.'Dr Andrew Dearden GP pensions – the next steps
• New Year – talks with BMA
• March – Hutton inquiry due; Budget to announce changes
• April – changes to tax relief
• ‘Progressive' increases in employee contributions to be phased in, subject to negotiations
Source: Department of Health