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.’