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Pensions raid ‘to cut GP take-home pay by 19%’

By Ian Quinn

Exclusive: GPs face a cut in their take-home pay of up to a fifth within the next three years under the Government's planned raid on their pensions, according to an analysis by accountants.

Figures obtained by Pulse show plans to ramp up pension contributions could mean GPs on £110,000 a year see their annual pay after deductions slump to less than £34,000.

The BMA revealed last week that it had seen Government documents showing the Treasury plans to make GPs, who only recently saw their employee contributions rise to between 6.5% and 8.5%, pay up to 15.5% in contributions by 2014/15.

Leading accountancy firm Dodd & Co's calculations suggest such a doubling in contributions would mean a GP on £110,000 paying superannuation of £32,450, and would see their take-home pay after tax, national insurance and pension contributions slump by 19%.

Dodd & Co also calculated the effect of a rise of three percentage points in contributions, an unlikely best-case scenario given the Government has already confirmed these will rise by an average of 3.2 points across the public sector, and high earners are likely to be hit hardest. Even under this scenario, take-home pay for a GP on £110,000 would fall by 8% after deductions – or £275 per month.

Pulse revealed in December that ministers were planning ‘progressive increases' to contributions from 2012 to 2014, but the scale of the plans has stunned GP leaders. The BMA is now planning to survey GPs across the UK to gauge what action should be taken, while a string of motions have been tabled for June's LMCs conference.

Dr Andrew Dearden, chair of the BMA's pensions committee, said: 'The Government's plans have nothing to do with pensions. This is just a tax on people who have been responsibly paying into the NHS Pension Scheme and keeping it afloat.'

Jeanette Brown, head of the medical accountancy team at Dodd & Co, said calculations were based on the BMA's claim contributions would double.

She said the firm had been inundated with calls from GPs considering 24-hour retirement, freezing payments and taking out other savings plans, or even cashing in their pensions altogether: 'There is panic out there. The time is fast coming when GPs are going to start saying "I'm going to take my money elsewhere".'

Dr Peter Swinyard, chair of the Family Doctor Association, is to join Pulse to deliver our pensions petition, already signed by more than 1,200 GPs, to Downing Street in June. He called on GPs to send the BMA post-dated letters of resignation: 'I'm 55 and don't want to retire, but if it becomes a financial necessity I'm off. There are very few issues which should cause us to send in undated resignations, but this is one.'

Dr Alison Davies, a GP in St Albans who has signed Pulse's petition, said: 'My husband and I are both GPs and our tax bills regularly measure the size of our mortgage. It's vital the BMA takes a strong stand on this.'

Department of Health spokesperson said: 'Member contribution rates to public-service pensions will be increased by an average of 3.2 percentage points, to be phased in from April 2012, and raising a total of £2.8bn a year by 2014/15. We cannot at this stage say how it will affect doctors, but the DH wants to work in partnership with the NHS trade unions on this.'

Impact on £110k GP

Current situation
Superannuation: £24,750 (includes 14% employer's and 8.5% employee's contribution)
Tax: £44,000
Take-home pay: £41,250

If contributions double
Superannuation bill: £32,450
Tax: £44,000
Take-home pay: £33,550

Three-point rise
Superannuation bill: £28,050
Tax: £44,000
Take-home pay: £37,950

Dr Alison Davies Click here to sign our petition No to 65