GP pension contributions are set to increase by as much as six percentage points by 2014, ministers said today, as they prepare to open talks with a coalition of health service unions on the future of the NHS pension at the end of this month.
The Treasury said that the total increase in pensions contributions for high earners – such as GPs – would be capped at six percentage points by 2014, before tax relief, with the hike phased in over three years. This amounts to a 2.4 percentage point cap in 2012-13 on a pro rata basis.
The move will mean a sharp increase in GP pension payments and is the first detail to emerge of the Government’s plans for GPs’ contributions to increase. In April the BMA warned it had seen documents from the Government’s Actuarial Department suggesting that GPs’ pension contributions could ‘almost double’ by 2015.
Danny Alexander, chief secretary to the Treasury,also confirmed today that talks on raising public sector pension contributions will get underway at the end of July, with the Trades Union Congress (TUC) overseeing talks with DH officials on an NHS-wide deal.
Earlier this month Pulse revealed that BMA leaders had joined forces with 16 other healthcare unions, including Unison, Unite and the Royal College of Nursing, to plead a special case for the NHS Pension Scheme. The unions have raised the threat of combined industrial action if ministers refuse to back down in the pensions row.
A BMA spokesperson said: ‘The 6% cap on contribution increases could still mean many doctors paying around twice as much for what is likely to be a worse pension,’
‘However, it’s positive that the Government has committed to open discussions on a scheme by scheme basis. We’ve always argued that the NHS scheme needs to be looked at separately, given the size of the surplus its currently delivering to the Treasury, and the fact that it underwent a major overhaul only three years ago.”
Today’s move by the Government is part of an agreement with the TUC to hold separate talks on key areas of public sector pensions, including the NHS, police and local government.
The talks, which Mr Alexander said will run alongside the ‘central process’ of high-level negotiations on pension reform, are expected to be completed by the end of October, and fully implemented from April 2012.
The Government has recognised that the local government pension scheme is in a ‘different position’ to other public service schemes due to the way it is funded – but has not applied a similar exception to the NHS pension scheme.
Ministers are scrambling to save £1.2 billion on pension schemes in 2012-13, £2.3bn the following year and £2.8bn in 2014-15. The savings require each scheme, including the NHS, to have an average increase in pension contributions of 3.2%.
Mr Alexander said: ‘The Government and the TUC have held a series of constructive meetings to discuss public service pension reform and have now agreed that to further inform the discussions on Lord Hutton’s recommendations, there should be scheme level discussions alongside the central process already established.’
A Treasury spokesperson told Pulse that ‘scheme-level talks’ will take place between the relevant departments – meaning the DH in terms of the NHS – and unions for each scheme.