GPs face £2,300 rise in pension contributions

GPs' pension contributions are set to rise by a third by 2015, with a £2,300 increase for doctors earning £100,000 in 2012, government figures reveal.

Mr Lansley: 'None of the rights people have accrued will be affected'
Mr Lansley: 'None of the rights people have accrued will be affected'

Figures announced by chief secretary to the Treasury Danny Alexander today showed that in 2012/13, pension contributions for NHS pension scheme members earning between £69,932 and £110,273 will rise from 7.5% to 9.85%.

For a GP earning £100,000 a year, this would increase the employee contribution from £7,500 to £9,850, an increase of more than £2,300.

For those earning £110,273 or more, pension contributions will rise from 8.5% to 10.9%.

Mr Alexander said that today’s proposals - set out in a consultation document - were just the start of the reforms.

Further increases will be introduced by 2015. The overall extra contributions will total almost £3bn a year.

By 2015 public sector workers will pay an average 3.2% more of their gross salary before tax in pension contributions.

Health secretary Andrew Lansley said: 'None of the rights people have accrued will be affected. The proposals we are setting out today will protect the lowest paid in the NHS. Those earning less than £15,000 will pay nothing extra towards their pensions and a nurse earning £25,000 a year would pay £10 more a month in 2012/13.

'The top earners in the NHS would be expected to contribute much more. A consultant earning £130,000, for example, would contribute £152 more a month.'

DoH worked examples for NHS pension scheme members at different levels of income:

As a manager working full-time earning £60,000

  • In 2012-13 you will contribute 8.5%, compared to the current employer contribution of 14% .
  • This means that for every £1 you contribute, the employer contributes £1.65. For your overall yearly contribution of £5,100, your employer will pay £8,400.
  • But because contributions are tax free your effective contribution rate will be 5.1%, equivalent to £3,060 per annum. This represents an increased personal contribution in 2012/13 of £60 per month after tax relief.
  • If you are in the 1995 section of the pension scheme then for this, after you retire, you will receive a pension, for this you will earn pension of £750 per year and a tax free lump sum of £2,250 payable at age 60.
  • If you are in the 2008 section of the pension scheme then for this, after you retire, you will receive a pension for this you will earn pension of £1,000 per year, with the option to exchange some of this for a tax free lump sum, payable at age 65.

As a consultant earning £130,000

  • In 2012-13 you will contribute 10.9%, compared to the current employer contribution of 14% .
  • This means that for every £1 you contribute, the employer contributes £1.28. For your overall yearly contribution of £14,170, your employer will pay £18,200.
  • But because contributions are tax free, your effective contribution rate will be 6.5%, equivalent to £8,450 per annum. This represents an increased personal contribution in 2012/13 of £152 per month after tax relief.
  • If you are in the 1995 section of the pension scheme then for this, after you retire, you will receive a pension for this you will earn pension of £1,625 per year and a tax free lump sum of £4,875 payable at age 60
  • If you are in the 2008 section of the pension scheme then for this, after you retire, you will receive a pension, for this you will earn pension of £2,167 per year, with the option to exchange some of this for a tax free lump sum, payable at age 65.

Would you like to know what the changes to the NHS pensions mean for you?

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