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GPs leaving NHS pensions scheme ahead of April changes

Exclusive Accountants are warning GPs are increasingly planning to leave the NHS pension scheme from April against their advice, due to new rules meaning many will have to work until 67 or 68 years of age or risk losing benefits.

They have told Pulse that a number of GPs have begun leaving the scheme as a result of the introduction of a new scheme that will mean all GPs who are not close to retirement age will have to work longer in order to receive their full pension entitlements.

This comes as yesterday’s Budget announced that the lifetime allowance for tax free pensions contributions is to be lowered again to £1m, which will bring more GPs paying tax on contributions.

GPs have told Pulse they are intending to opt out of the pensions schemes before 1 April because of fears over what will happen to their pensions if they have to take early retirement due to burnout, while a Pulse survey of 564 GPs last November revealed that 20% of GPs intend to leave the plan following increases to contributions and incremental reductions to pensions tax relief.

But accountants and the BMA have warned that leaving the scheme was not the best option for the vast majority of GPs.

The April change will affect all GPs who were not within ten years of their normal retirement age on 1 April 2012.

Those who were within ten years of retirement age have full ‘protection’ from the new, less generous 2015 scheme and those who were within 13.5 years have ‘tapered protection’, meaning they will enter the scheme with a delay which is dependent on their age.

This will only affect contributions made after 1 April, however.

The pension scheme went through overhauls in 1995 and 2008 respectively, with the normal pension age under the 1995 scheme set at 60 and increased to 65 under the 2008 scheme, but this year’s changes will put the normal pension age in line with state pension age.

Dr Benjamin Williams, a 43-year-old GP partner in Swinton, said he would leave the scheme because he would have to work until 67 to accrue all the benefits.

He said: ‘I have weighed up all the pros and cons regarding the 2015 pension scheme and have decided to pull out of the new pension scheme from 1st April. One of my colleagues has also done the same.

‘With the current unsustainable workload in general practice I am absolutely sure that working until 67 is not an option for me and if I take my 2015 scheme pension at 60 I will lose roughly 35% of the value of the 2015 pension.’

Accountants have said there are an increasing number of GPs leaving the scheme.

Bob Senior, chair of the Association of Independent Specialist Medical Accountants, said that about ‘25% or 30%’ of GPs aged between 50 and 53 are looking at leaving the pension scheme as ‘they just don’t think the new arrangements represent good value.’

He added: ‘A lot of GPs have always thought they would retire at 60, and very few have the appetite to go on to 67… I’ve come across one or two young GPs who want to leave the scheme. They don’t seem to trust politicians because they have seen them play around with pension schemes in the past and they think they will do the same again to make them even less attractive in the future.’

Luke Bennett, a medical accountant and partner at Francis Clark, estimated from his encounters with GPs that about a quarter of those currently aged between 47 and 50 want to opt out of the new scheme.

However, they have warned that GPs should not leave the scheme.

Keith Taylor, head of medical services at BW Medical Accountants, said he has come across GPs of varying ages who do not want to be part of the new pension scheme. ‘I spoke to a junior partner recently and he thinks he can get a better return elsewhere.

‘But actually the pension scheme for GPs, even after the changes, still has a much better return than you would get virtually anywhere else except in very high risk equity punts. People in the private sector would give body parts for a pension scheme like this. I think there has been scaremongering about the changes to the scheme. For nearly everybody, it’s worth staying in.’ 

Mr Bennett said: ‘Even with the changes the 2015 scheme is a valuable benefit and one which I would be happy to join if it were open to accountants.’

The BMA, which unsuccessfully fought the pension changes culminating in doctors walking out on the ‘day of action’ in 2012, also warned GPs considering a full exit to consider the impact on benefits like the death in service gratuity (two times actual annual pay) and the right to future ill-health retirement.

Its guidance said: ‘[S]ome doctors are questioning whether they should remain in the scheme or opt out [but] it is extremely important to think about the impact this will have on the valuable associated benefits provided… Consequently, any decision to opt-out of future service should not be taken lightly. It is unlikely to be in the best interests of the vast majority of scheme members to make the decision to opt out.’


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