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Partners to pay higher employer pensions contributions following Government cost savings

GP contractors face paying higher pension contributions for their employees from 2015, after the Government announced further cost savings were needed in the NHS Pension Scheme.

The Treasury said a review of all public pensions schemes will ‘introduce new higher employer contribution rates’ across the board.

The GPC said it was seeking clarification around the changes, but it looked like ‘bad news’ for GPs, while medical accountants said the announcement would mean GPs’ employer contributions to staff pensions would increase.

However, it is unclear how much extra expense GPs will incur until the results of the review are published later in the spring, or whether NHS England will increase income to compensate for the increased costs.

This latest blow follows on from controversial decisions to bring in a tiered contribution system for NHS pension employee contributions, meaning GPs will have to pay a higher proportion of their income, and the raising of the normal pension age.

Meanwhile, tax relief on pensions contributions is being reduced from this April, leaving many GPs with higher tax bills.

In a written ministerial statement on Thursday, chief secretary to the Treasury Danny Alexander said that the size of the rise in contributions will be decided by a valuation of all public sector pension schemes and the employer ‘cost cap’, which currently regulates how much employers should pay.

However, he added that it was ‘already clear’ that contributions would need to rise to cover a £1bn shortfall across the schemes for the NHS, teachers and civil service.

Mr Alexander said the Government had ‘made directions’ that would form the basis of ‘full actuarial variations of the schemes’, adding it was the first time such valuations had taken place of all public sector pensions schemes simultaneously. .

The statement added: ‘The final results for the NHS, teachers and civil service schemes will be published later in the spring. But it is already clear that these will show the level of contributions paid by employers have not been sufficient to meet the full long-term costs of these schemes. If current rates were allowed to continue the shortfall would be nearly £1bn a year across the teachers, civil service and NHS schemes.’

‘The Government is therefore taking corrective action, and will introduce new higher employer contribution rates for these schemes from 2015. This will ensure that the contributions paid by public service employers reflect the full costs of the schemes, including the costs of the deficits that have arisen since previous valuations.’

Dr John Canning, chair of the GPC pensions committee, said: ‘As I read it, this is bad news and seems to reverse the previous policy.’

Combined with changes to tax reliefs on pensions, this constitutes a ‘massive hit’, Dr Canning added.

Medical accountant Luke Bennett, partner at Francis Clark LLP, said: ‘It appears to be suggesting that the employer - but not employee - contribution rate will increase in April 2015, but doesn’t say by how much.’

‘The NHS scheme, along with teachers and civil service, is specifically mentioned, so yes this will affect GPs. The responsibility [for paying the increased employer contributions] will fall first on the GPs. Whether the Government will then increase their income to compensate for this is a moot point.’

Readers' comments (30)

  • This comment has been deleted by the moderator

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  • Thank goodness a VER parachute . Go
    o
    d
    b
    y
    e
    e

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  • Now all is clear . By making it impossible to continue as an independent contractor everyone will work for Virgin and be paid in air miles .

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  • I'd like to bet that if you earn too many air miles your plane disappears .

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  • If we were in any doubt this is a sustained vicious assault on GP partnerships that will only end when we are destroyed.
    Cabinet ministers are selfish individuals by nature and self preservation is their only game.
    Sadly it would seem the only way forward is to impact those who can vote them out ie the public by a mirrored reduction in the service provision we supply whilst cranking up our own PR machine both locally and nationally, to inform patients why this is happening (with or without BMA support).

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  • If nobody signed up for OOH shifts they would be uterlichgefucht as the Eurodocs say.

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  • I agree with 6:21pm

    I think someone should work out total reduction in pay package (inc pension contribution/ outcome, workload issues and inflation) then all of us mirror that as an equivalent reduction in appointments.

    It will surely result in changes because it will cost loads in hospital appointments etc.

    Even if it didn't if it made my working time significantly easier then that would count as a victory for me.

    Good will = 0

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  • Wise up VOTE LABOUR I have never done so in my life but I will now,my surgery will be covered in vote labour posters on Election Day it may be against the law but what are those Tory b******s going to do about it they won't be in power for a generation

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  • The public considers GPs as overpaid,under qualified,fatcats which need to be brought down a peg or two.Our hospital colleagues look down at us as intellectual lepers belonging to a class of failed hospital doctors.With that kind of pervasive,poisonous,deeply embedded sentiment it's hardly surprising that we fail every PR battle.

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  • The same is happening across the board and employers will be expected to pay for it.
    BBC news re education......
    "Schools in England face having their budget increases "snatched back", a head teachers' union has warned.

    The government that schools in England will receive an extra £350m in 2015-16.

    However, the Association of School and College Leaders (ASCL) says the increase will be swallowed up by rises in pension contributions and salaries.

    The Department for Education says schools are now "well positioned" to pay higher pension contributions."

    http://www.bbc.co.uk/news/education-26576723

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