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Treasury pension mistake could affect GPs for decades, MPs warn

Treasury pension mistake could affect GPs for decades, MPs warn

GPs and other members of the public sector pension scheme could be paying for mistakes made by the Treasury for ‘decades’, the Public Accounts Committee (PAC) has warned.

But the BMA said members must not be made to pay the bill for the error, which occurred when the Treasury moved members below a certain age to a new pension scheme without offering any transitional protection in 2015.

The Treasury estimates that putting things right following the change, which the Court of Appeal held to be discriminatory in 2018, will cost around £17bn.

The PAC report, published last week (11 June) said that the Treasury ‘should have foreseen the age discrimination issue that gave rise to the 2018 McCloud [Court of Appeal] judgment’, adding that ‘putting things right will take many decades to resolve’.

It added: ‘HM Treasury wants members to pay to put this right – at an estimated cost of £17 billion -despite this being its own mistake’. 

The Treasury must now quickly resolve the issues raised in the McCloud judgment to ‘rebuild the trust’ that has been lost, and write to the group of MPs in six months’ time with an update, the PAC said.

The PAC report also noted that a large number of doctors reduced their working hours, opted out of the scheme, or retired early due to tax concerns. It recommended that the Treasury should in future set out the likely impact on employers in advance of rate changes, giving plenty of notice.

It also noted that over 238,000 public sector employees have opted out of their pensions, stating that it is ‘particularly concerning if younger and lower paid employees are more likely to opt out’. 

PAC chair Meg Hillier said: ‘The Treasury’s £17bn mistake on pensions reform is a ripple compared to the tsunami of costs to the public purse if Government fails to address the growing number of young people unable to afford to plan for a proper pension.

‘Its lack of curiosity about why nearly a quarter of a million workers are not joining these pension schemes is a concern. Pension planning must be long term; mistakes and poor planning have an impact for decades.

‘Short term cost savings can become long term costs to individuals with lower retirement incomes and the taxpayer who may end up supporting them.’

NHS pension specialist Graham Crossley, from wealth management advisory service Quilter, said a ‘significant number’ of those who benefited from the discrimination are likely to have retired or are retiring shortly, and will not have to pay to fix the problem.

Many members who joined the pension scheme after March 2012 ‘will have nothing to gain from the McCloud ruling’, as they joined too late to have any remedy applied, he added.

Yet, these members ‘could be expected to pay to fix the Government’s mistake’, with no benefit to themselves, he said, adding ‘most would agree that that does not seem fair’.

BMA pensions committee chair Dr Vishal Sharma said it would be ‘completely unacceptable’ if members of the pension scheme are left to foot the bill for the Treasury’s mistake.

He said the BMA ‘strongly opposed’ the pension changes in 2015, and welcomed the Court of Appeal’s decision ruling that younger members had been unlawfully discriminated against.

‘This was a problem entirely of the Government’s making and it is their mistake to fix’, he added. 

These findings come as the Government recently confirmed NHS pensions reforms that experts say will see GP practices spared charges of up to ‘hundreds of thousands of pounds’.

Last week, Pulse also reported that many GPs could miss out on reclaiming their pension tax charges for 2019/20, with the potential for individual GPs to miss out on ‘thousands or potentially tens of thousands of pounds’.