GPs face hike in pension payments
By Christian Duffin
High-earning GPs face big increases in their pension contributions following changes to the payments system, medical accountants warned this week.
The news comes as a sting in the tail of the NHS pensions review, which will allow GPs to maintain their career average pension schemes and the right to retire at 60 on a full pension.
GPs' contributions will rise from 6% to as high as 8.5% in a new tiered system. Those earning a full-time equivalent salary of up to £63,416 will contribute 6.5%; earners up to £99,999 will contribute 7.5%; and GPs on over £100,000 will have to pay 8.5%. High earners will also be affected by the abolition of a contributions cap on incomes of more than £112,800.
Some experts claimed that GPs may be disincentivised from topping up their income with out-of-hours shifts under the new system.
Luke Bennett, committee member of the Association of Independent Specialist Medical Accountants (AISMA), said a GP earning a pensionable income of £130,000 will face contribution increases of £6,690 a year.
He said: ‘Although the GP will get tax relief on the contributions and benefit from an improved pension on retirement, the immediate increases in contributions over which the GP has no control could prove very painful.'
He added: ‘Younger GPs putting in extra out-of-hours work to boost their incomes – to pay large mortgages or school fees, for example – will be hit particularly hard. AISMA estimates that some could be facing annual contribution rises of £13-14,000.'
Dr John Couch, pensions expert and a GP in Ashford, Middlesex, said: ‘Certainly these proposals will further whittle away GPs' cash flow. And I suspect some GPs may feel that doing extra out-of-hours work may no longer be worth it.'
NHS Employers and health unions, including the BMA, finalised the changes last week as part of the NHS Pension Scheme Review. Dr Andrew Dearden, chair of the BMA's pensions committee, said: ‘The health unions have negotiated to keep the most important features of the NHS Pension Scheme. Our priorities were based on a consultation with BMA members last year.'
Health minister Ben Bradshaw said: ‘The new arrangements will give staff more control over how they save for their retirement as well as how and when they retire, while managing costs.'
The BMA is still awaiting a date for a judicial review challenging Government plans to cap doctors' pensions. Those who have retired since 2006 are most affected, with some set to lose up to £6,000 a year.
For GPs joining the scheme from 1 April next year, the minimum age of drawing a reduced pension will be 55, compared with 50 for existing doctors.NHS pensions review outcome NHS pensions review outcome
60 – the age at which current GPs will be able to retire on full pension
65 – the retirement age with full pension for future GPs joining the NHS after 1 April next year
£6,690 – estimated yearly hike in contributions for GP on £130,000
£13-14,000 – estimated increase in annual contributions facing some younger GPs