GP pension age to rise to 65 with benefits reduced

GPs could be forced to work to 65 and receive lower-value pensions under proposals set out in a report on public sector pensions.

Lord Hutton's report says existing pension scheme members should have their rights protected on pensions accrued to date
Lord Hutton's report says existing pension scheme members should have their rights protected on pensions accrued to date

The BMA has warned that an increase in normal pensionable age for existing NHS staff would be ‘unacceptable’ and could lead to a wave of early retirements.

Many GPs could be pushed into taking 24-hour retirement to claim their pensions and then return to work part-time, the BMA said.

The final report from the Independent Public Service Pensions Commission recommends an overhaul of existing public sector pensions to be implemented before the end of the current Parliament, which runs until 2015.

The commission, led by Lord Hutton, says existing pension scheme members should have their rights protected on pensions accrued to date, but move to revised deals on future contributions.

Because of rising life expectancy, Lord Hutton recommended that the government links the pension age for public sector pensions to the state pension age, currently 65 years and set to rise to 66 years in 2020 and higher still in subsequent decades.

BMA leaders pointed out that changing the NHS pension scheme would be unfair so soon after a revised deal took effect from 2008. The deal protected pension rights such as retirement at age 60 for existing pension scheme members in return for increased contributions, but has already seen the normal pension age for new NHS staff rise to 65.

BMA chairman Dr Hamish Meldrum said: 'An increase to the retirement age for NHS staff would be unacceptable. Doctors in their late twenties who had expected to retire at 60 could now have to work to the state retirement age of 68. Such a sudden leap is particularly unfair given that NHS staff signed up to a significantly revised pension scheme only three years ago.'

The main recommendation of the report is a switch to career average schemes for all public sector employees, a move that would not affect GPs.

GP pensions are already based on a career average revalued earnings deal, which gives them benefits roughly equivalent to consultants on final salary schemes. This is because consultants’ pay rises steeply towards the end of their careers, while GPs’ earnings trajectory is relatively flat.

The commission’s report says that the government should take additional steps to cut the cost of public sector pensions.

‘The government, on behalf of the taxpayer, should set out a fixed cost ceiling: the proportion of pensionable pay that they will contribute, on average, to employees’ pensions over the long term. If this is exceeded then there should be a consultation process to bring costs back within the ceiling, with an automatic default change if agreement cannot be reached,’ the report says.

It adds: ‘Although these mechanisms have not yet been fully tested in practice, the NHS scheme operated an employer cost cap when they undertook the 2008 reforms. A cost ceiling would effectively replace the current cap and share mechanisms.’

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