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Hike in GP contributions as Government pushes ahead with pensions reform

GPs look set to face a massive hike in their pension contributions as ministers signalled that higher earners will pay more in a bid to shield low-paid public sector workers.

Chief secretary to the Treasury Danny Alexander announced a raising of the public sector retirement age to 65 and an average rise in employee contributions of 3.2% of pensionable pay.

Mr Alexander also accepted recommendations made by Lord Hutton to link pension values to the Consumer Prices Index instead of the Retail Prices Index. However, he pledged that all prior payments into the Final Salary Scheme will be honoured.

The contribution increases will also be phased in over three years, with 40% of the increase in 2012, 80% in 2013 and the full rise in 2014.

However, the change is likely to hit higher earners - such as GPs - hardest, as the contributions increases will be banded according to income. Those earning under £15,000 a year will have no increase, while those on less than £18,000 a year will pay an increase of 1.5%.

Precise figures for the contributions rise for higher earners were not given in the statement released today. A Treasury spokesperson said these would be published in early July.

GPs only recently saw their employee contributions rise between 6.5% and 8.5%.

A call for the GPC to consider strike action over pensions was rejected at the LMCs conference earlier this month, following a boisterous debate in which 82% of delegates rejected the motion amid warnings that it would amount to 'professional suicide'.

Mr Alexander said the changes will save the Government £1.8 billion a year by 2014-5. Extra employee contributions will amount to £2.8 billion on the same timescale.