Exclusive One in five GPs intends to leave the NHS superannuation scheme, which GP leaders said was a result of ‘massive’ increases in employees contributions and ‘punitive pension changes‘.
A Pulse survey of 564 GPs revealed that 20% of GPs intend to leave the pension plan, saying they have lost faith in the ‘ever changing scheme’ and are losing half of their payments in tax. Just 53% said they definitely would stay in the scheme.
The survey also found that GPs were increasingly looking at retiring early, with 56% saying they intended to retire before the age of 61, and just 14% intending to stay past 65
The average retirement age, worked out through a mid-point analysis, was 60 – which has gone down from last year’s average age of 61.
Pensions experts said the NHS scheme remained a very good option for GPs and that no one should opt to leave without robust financial advice, but said for some individuals it might be the right choice.
The changes, introduced by former health secretary Andrew Lansley, led to doctors taking a day of industrial action in 2012 and GPs paying significantly more of their take home pay on pensions.
Dr David Bailey, who is deputy chair of GPC Wales and the GPC’s pensions subcommittee, told Pulse that employees contributions have increased to 14.5% of net incomes, up from 6% a decade ago, while employers contributions will soon be 14.3%.
Dr Allison Buckley, a GP in Stockport, Cheshire told Pulse she has worked part time and wasn’t near the lifetime cap on contributions, but she said she was considering leaving the scheme because the contributions were too high.
Dr Buckley said: ‘With buying added years superannuation contributions have taken a large proportion of my income.
‘I worked out I would have to live until about 120 to recoup in pension what I would pay in superannuation between 60-65 years, hence not worth paying.’
Dr Nigel Dickson, a GP in Southampton, Hampshire told Pulse: ‘I couldn’t afford to pay the tax bill on the increasing pension pot this year – it was going to be more than 50% of my income – plus my other tax wouldn’t have left any spending money – how stupid is that?’
He added: ‘The Government has ignited a short fuse on its NHS pension scheme – forcing out high contributors like myself to the scheme who are being forced on economic grounds to draw their large pensions early.’
It’s a downward spiral, government has set off to self-fulfil their own prophecy that a self-funding profitable pension scheme for last 60 years they’ve fiddled around with to make it into a potential loss making scheme with their silly changes in taxation, lifetime allowances etc.’
Dr Bailey said that ‘knee-jerk’ reactions to pension changes were understandable, but GPs should consider how any change affects them first.
He said: ‘There are circumstances in which it might be the right thing for the individual, particularly towards the end of their career, or if they’re coming close to the annual or life time allowance caps. But they should certainly take individual advice.’
He added: ‘It’s been driven clearly by the massive increase in contribution rates. The problem is now, that what we’re seeing is your employers contribution is 14% and will be going up soon to 14.3%.’
‘But the employees contributions have gone up to an extent where they will be paying 13.5%, some will be paying 14.5% out of their net incomes after net profit. It’s still tax deductible, but that’s coming off their profit line and ten years ago it was 6%, and only four or five years ago it was 8.5%.
‘So it’s a big, big increase when GPs are seeing incomes dropped.
‘There’s always the knee-jerk when Government do something bad to the scheme, it’s certainly possible that some people think “that’s the straw that breaks the camel’s back” rather than thinking, “what does this mean for me personally?” which is what they should be doing.’
GPC deputy chair Dr Richard Vautrey told Pulse: ‘Older GPs are heading to the exit as quickly as they can and the punitive pension changes and spiralling workload pressures are pushing them out through the door.’
He added: ‘Many older GPs have the option to retire early, but with the pension changes this won’t be an option for young GPs. There is therefore a real risk that in the coming years we’ll see a big increase in GP burnout if younger GPs feel trapped in high demand situations.’
A DH spokesperson told Pulse: ‘We know GPs are under pressure, which is why we’re increasing trainees so that GP numbers continue to grow faster than the population. As independent contractors, GPs can choose to invest their employer pension contribution elsewhere, but the return in the NHS Pension Scheme remains a rewarding option for GPs.’
Pulse revealed in September that a mistake by NHS Pensions had practices facing thousands of pounds extra in tax bills, after provisional statements for 2013/14 were erroneously billed as ‘final’.
At what age do you intend to retire?
Under 50 – 2%
50-55 – 12%
56-60 – 42%
61-65 – 30%
66+ – 14%
Total – 564
Are you planning on leaving the NHS superannuation scheme?
Yes – 20%
No – 53%
Don’t know – 17%
Not applicable – 10%
Total – 564
The survey launched on 31 October 2014, collating responses using the SurveyMonkey tool. The 31 questions covered a wide range of GP topics, to avoid selection bias on one issue. The survey was advertised to readers via our website and email newsletter, with a prize draw for a Samsung HD TV as an incentive to complete the survey. Some 564 GPs answered these questions.