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Independents' Day

BMA hails ‘milestone’ concession from Government on pensions negotiations

GPs may be set for lower pensions contributions than previously thought from 2015, the BMA claims, after the health secretary accepted their argument for lower increases for higher earners was ‘reasonable’.

In a move the BMA said showed ‘signs of a fairer deal’ on pensions, Jeremy Hunt accepted that the move towards a career-average pension undermined the Government’s proposals for greater contributions for higher earners.

Mr Hunt said the Government will not backtrack on its decision to raise employee contributions to an average of 9.8% by 2015. 

However, he said that the tiering arrangements for the contributions – the so-called ‘Robin Hood’ element of the deal, which would see higher earners paying higher percentages of their salary compared with lower earners - were yet to be decided.

The letter to the BMA, said the Department of Health was bringing forward discussions with the unions on pensions contributions, originally scheduled for early 2013.

The letter said: ‘I would like to assure you that while the NHS PS Proposed Final Agreement makes it clear that employee contributions will average 9.8% from 2015, we have not yet made any decisions about the tiering arrangements to deliver this.

‘You raised a number of issues that should be taken into account… in particular, you acknowledged the need to protect the low paid; recognised the impact of tax relief; and, take account of the fact that career average pensions deliver benefits more closely related to the contributions paid than a final salary pension.

‘These seem reasonable, but there are also other issues to be considered.’

In a blog post on the issue, BMA chair Dr Mark Porter welcomed the letter. He said: ‘The latest response to the BMA from health secretary Jeremy Hunt, opening up the potential for a much flatter contribution structure post 2015, is a significant milestone in our campaigning.

 ‘We have argued that in a CARE scheme, aside from needing to protect the lowest paid and to reflect higher rate tax relief, there is no justification for “tiered” contribution rates — i.e. staff on different salaries paying different proportions of their salary in contributions. Importantly, the health secretary says that these are “reasonable” points that should be taken into account.’

Dr David Bailey, deputy chair of the BMA’s pensions committee said: ‘It’s encouraging that Jeremy Hunt has acknowledged the argument that there’s no need for tiering in a career average pensions scheme. We’ve consistently been making this argument and anyone mathematically literate should see it as obvious.

‘I wouldn’t call it a victory because we’re a long way from knowing what the Government is going to do, but at least they’ve signalled they’re listening to the arguments and a change in proposal is still up for grabs.’

A Department of Health spokesperson said: ‘The Health Secretary’s letter to the BMA addressed their concerns about pension contributions in the longer term, after April 2015. The letter is clear that no final decisions have been taken and the DH will work with trade unions to reach a fair agreement. We understand that the BMA has proposed a flatter structure - this will be one of the many options that is considered by the NHS Pensions Governance Group, but no decisions have yet been made.’

Readers' comments (10)

  • That's probably because no Doctor will be earning more than 70K in the near future and they will all be working for private companies with private pension schemes. I'll be keeping my champagne on ice for the moment

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  • If the commitment to an average contribution of 9.8 %remains then clearly a significant proportion will be paying more than 9.8%. I am not clear how this can represent a "significant milestone".

    We're stuffed.

    I stopped obsessing on the contribution element a long time ago. All I want to know is when I can go.

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  • Let common sense prevail

    I can't help thinking that by April 2014 my contributions will a be slightly lower % than anticipated, but that tax relief will have been cut back to basic rate, so in fact my contributions will be higher than anticipated before this 'landmark victory'.

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  • already given up hope NI GP

    I agree comments on tax relief should be much more worrying than a few percent on tiered earnings.Watch this space

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  • Drawing my pension when I am nearly 70 is less important to me than retiring when I am nearer 60. Working as a GP, I am acutely aware that many people never see their 60s in good health.

    I for one will be opting out of the scheme entirely, and enjoying my money now, whilst I am still alive!!

    I will be cracking open the champagne!

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  • Peter Swinyard

    Shed a little tier for me??? If the BMA thinks this is worth spinning as a victory, then it sounds truly hollow. GPs will accept increased contribuitions as soon as - and not before - they see the same increased contributions applying to ALL public service pensions. Including PMs, senior civil servants, members of the judiciary etc etc., Until then, this policy is making all senior GPs look very closely at taking retirement as soon as they hit 60 - or earlier - and not being ther to provide the wealth of wisdom they possess to their patients and colleagues. This is not the medicine we need, BMA.

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  • Jeez, from meekly accepting changes to a scheme running in surplus, to spinning this as a 'milestone' concession, just what is the purpose of the BMA?

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  • I cannot see anything of any substance in the letter to justify even remotely the BMA's mention of "milestone". It is the usual political rhetoric which is not even worth the electronic paper it is written on This is a classic example of "empty vessels making the most noise". Come on now fellow GPs,become a fellow of the retired GP club (RGPC) and save your sanity and your health.

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  • I think this must shurely be a typo he meant millstone not milestone....
    great work BMA as always
    with concessions like these we can all sleep soundly in our beds knowing these guys are out there batting their hardest fighting our every battle....
    I'll stop now.....

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  • A simple solution is for NHS (and perhaps all public sector) workers to take a pension 'holiday' for say 6 months (which I believe is allowed under our current schemes.)

    A small break would have negligible impact on the final value of pensions, employees would see an increase in take home pay for the period of the 'holiday' and GP's would enjoy a bonus by keeping the element relating to their employers' contribution too.

    No patient would be inconvenienced and if our public sector colleagues (simultaneously by chance) did likewise , no pupil would be untaught, no benefit claim would be affected, no customs queues would develop etc.

    However the treasury would be significantly inconvenienced. Public sector pensioners receive their pensions from the contributions made by those still in work. (The government keeps any surplus). For the period of any pension 'holiday' pension payouts would still have to be funded but from other sources.

    I suspect this would be something the coalition can ill afford and might encourage them to engage in discussions rather than the issuing of edicts.

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