Why you should still value your pension
In the wake of the Government's proposedcap on GP pensions, Dr John Couch urges colleagues to realise what a valuable pension they enjoy and tofight against any further attacks on it
I had a lighthearted e-mail discussion with a colleague last week about the proposed capping of GP pension dynamising factors.
One of my points was that this significantly disadvantages GPs with respect to consultants.
Consultants' final salary pension deal is unaffected by Lord Warner's proposals. But these proposals will reduce GPs' final pensions and lump sums by several thousand pounds (precise figures are not yet available).
My colleague agreed with most of my sentiments – but not with my remark about consultants as, unknown to me, he is married to one!
Although the BMA is fighting the proposals, its solicitor, Lockharts, is pessimistic about success. So GPs should be fully aware of the importance and value of their NHS pension.
Lord Warner's threat is unlikely to be the last. Before the recent decline of private sector pensions, public sector pensions did not stand out from the crowd. It is partly because other pension deals have receded that this has now changed.
Public sector pension contributions are used to pay existing pensioners, instead of being invested in a pension pot for your future pension.
Our own pensions will be paid by our successors, with any shortfall made up by the Treasury from general taxation. This burden will increase as an ageing workforce reaches retirement.
It is clear that Lord Warner (now retired on his civil service pension, no doubt boosted by his last couple of lucrative years reviewing NHS pensions!) was the instrument of Treasury concern.
If the BMA is unsuccessful in its fight we should still remember what our pensions will offer. A 48 per cent dynamisation increase over five years is a useful boost at a time of low inflation.
On average a full-time GP four years ago could expect a pension of around £36,000 at age 60. That figure now looks nearer to £50,000, well into higher tax territory.
We also receive a tax-free lump sum of three times this, can still retire at 60, pensions are index linked and our spouse receives a half pension if we die first.
Before you begin to feel guilty, there are better public sector pensions available. Consultants still receive full final salary deals. Police can retire after 35 years' service on 50 per cent of final salary and a four times pension lump sum.
The best deal by far is that enjoyed by MPs. They can accrue pension at a rate of 1/40th. This means that they can retire on half final salary after only 20 years of service! This seems a good area for Lord Warner's successor to explore.
There is, of course, one way for GPs to achieve a better deal and that is to marry within the public sector. Choose another full time medic and a joint six-figure pension could be yours.
A surviving spouse would keep their pension and half of the other one. It sounds good, doesn't it?
If the BMJ had a lonely hearts section I can imagine the advert now. Thirtysomething male GP. Full time and member of NHS pension scheme. Enjoys skiing, golf and financial management.
WLTM similar female medic with same interests and aspirations for mutual friendship, to combine financial forces and live happily ever after.
Replies with photo, CV and recent copy of NHS pension forecast to BOX 35.
John Couch is a GP in Ashford, Middlesex