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Government ‘may use dynamising factor to devalue GP pensions’, accountants warn

By Ian Quinn

Accountants have warned that the Government may seek to use the dynamising factor used to calculate GP pensions to bring down the value of NHS retirement packages.

The BMA is on alert for a major battle with the Treasury after a Government-commissioned review claimed that current payments to public-sector pensions were untenable.

Lord Hutton's interim report last week attacked final-salary schemes, which include the NHS Pensions Scheme, branding them 'fundamentally unfair' and also raising wider doubts about the way public-sector pensions are valued compared with the private sector.

Unlike consultants, GP partners' pensions are based on a career-earning system rather than final salary, but accountants and the BMA warned the Government was unlikely to concentrate its fire solely on certain factions within the NHS Pensions Scheme.

Accountants told Pulse the Government may try to use the annual dynamising factor, which is used to calculate pension values for GPs when combined with average GP earnings, as a vehicle to cut retirement packages.

GP pensions rose steeply after the 2004 contract, in some cases by more than 50% in two years, and an attempt by the previous government to retrospectively cap them was defeated by the BMA in the High Court in 2008.

One accountant, who asked not be named, said: ‘Any GP who thinks this is not going to affect them is living in dreamland. Long-term Hutton is right, the pension situation is untenable.'

‘I can't imagine it would want to alienate GPs at the moment with its NHS reforms. I wouldn't be surprised if it leaves their pensions until GPs have swallowed the pill.'

Mike Gilbert, a partner of Gosforth based RMT Accountants & Business Advisors, said his advice to GPs would be to ‘keep their heads down'.

Dr Andrew Dearden, chair of the BMA pensions committee, said the new report's findings were ‘frustrating'.

‘The NHS scheme has already been subject to a major overhaul, adopting many of the changes he recommends, such as tiered contributions and higher retirement age,' he said.

In its response to Lord Hutton's inquiry, the BMA pointed out that changes brought in in 2008 saw the normal pension age for new staff increase from 60 to 65, and employers' contributions capped, with contributions from doctors increasing by up to 2.5%, meaning GPs now pay employer contributions of 14%.

'Most GPs pay 21.5% - 22.5% of they pay in contributions to the scheme,' it added.

The BMA insisted rates paid by NHS staff 'are not out of line with those paid by members in the private sector', and warned 'increases in contributions could lead to signficant numbers of doctors leaving the scheme'.

Dr Andrew Dearden: Report's findings are 'frustrating' Dr Andrew Dearden: Report's findings are 'frustrating'

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