The BMA has all but conceded that GPs will have to continue paying up to 14.5% pensions contributions after the Pensions Act is enshrined in law despite last year hailing a ‘milestone concession’ from the Government that it said could lead to fairer contributions.
In an exclusive interview with Pulse, Dr David Bailey, the deputy chair of the GPC pensions subcommittee, said he thinks it unlikely that the BMA will be successful in pushing through its demands for a flatter tiering of contributions – which would lead to GPs paying a similar percentage of their salaries as lower paid NHS workers – before the Pensions Bill is implemented in 2015.
However he said that the battle for fairer contributions will continue after the Act is implemented because the Government would be ‘unable to refuse the argument of fairness’ once the higher contributions are in place.
This signifies a reversal from the BMA’s position in November when it said there was scope for negotiation on the tiering of contributions following a ‘milestone’ letter from health secretary Jeremy Hunt that suggested the Government was willing to consider a flatter structure from 2015 so long as it raises an average 9.8%.
The Government began to widen the tiering within pension contributions for higher paid NHS staff from 2008 and this is set to continue over the next couple of years, with the top earners paying up to 13.3% in contributions from April compared with the th lowest rate of 5%
The issue of flatter tiering has become a prime focus of the BMA’s pensions campaign after all but giving up on the idea of blocking the Pensions Act, which will see the end of the final salary pension scheme in the NHS and could lead to GPs working up to the age of 68.
However, other unions are not willing to move towards a flatter structure. Rachael Maskell, who is head of head at the Unite union, said: ‘We are not supportive of the BMA’s position on tiering. Clearly it would mean the lower paid would have to pay more or their pensions. We couldn’t agree to that.’
Dr Bailey said the BMA will continue campaigning for flatter contributions until 2015 and beyond.
He said: ‘I am not expecting any resolution anytime soon. I think after 2015 it will concentrate minds a lot, once we actually move to a CARE scheme I think that we will have a clearer argument about what’s happening there.
‘I don’t think that there will be changes in the increase that has previously been announced to contribution rates, but I do think that there is at least a possibility that after 2015 some sort of concept of fairness and reasonableness will start to surface.’
Meanwhile, the BMA is also locked in consultation over rising retirement ages as a key stakeholder in the Working Longer Review group. The BMA has previously warned that if a 40-year-old GP would have to work for seven years longer, to the age of 67, they could be paying 50% more into the scheme to get around 13% less out of it under current proposals.
But Dr Bailey said he finds it unlikely that the Government will reopen the discussion and add more employment categories – beyond the likes of the fire services, the army and the police – to the list of professions exempt from a higher retirement age.
He said: ‘I think that the arguments about fairness are going to be very difficult for the Government to combat in the longer term. I think to say that somebody earning £30,000 or £40,000 should be paying less into their pension than somebody who is earning a bit more than that is a very difficult argument to make. The argument that somebody in the civil service earning £100,000 should be paying half towards their pension compared to somebody in the National Health Service who earns £100,000 is impossible to sustain.’
‘In terms of working longer I don’t know. I think it will be very difficult for the Government to accept any new special pleading. I think some aims of the working longer review will have to be looking at how you can structure your pensions throughout your working life to aim for a different retirement age. Again, if you make pensions fairer so at least everybody is paying the same contribution rates, then at least it will be possible to do that.’
‘I am not expecting any resolution anytime soon. I think after 2015 it will concentrate minds a lot, once we actually move to a CARE scheme I think that we will have a clearer argument about what’s happening there.’
As for the Government-proposed increases to pensions contribution rates for the two remaining financial years on the Final Salary scheme, Dr Bailey was even less hopeful.
He said: ‘In terms of the increases in pension contributions this year from April 2013 and again from April 2014… Although they will allegedly consult in 2014, you know and I know that consulting means we will tell you what we are going to do, we let you moan about it for 12 weeks and then we do it anyway. That is what consulting means to this Government by and large. So I don’t think that there will be changes in the increase that has previously been announced to contribution rates, but I do think that there is at least a possibility that after 2015 some sort of concept of fairness and reasonableness will start to surface.’
Dr David Bailey is also chairman of GPC Wales and sits on the GPC premises committee.