GPs face 24% cut in take-home pay

Pension and tax reforms could slash take-home pay for some GPs by more than 20%, accountants have warned.

Dr Andrew Dearden: NHS scheme could be 'seriously destabilised' (Photograph: Wilde Fry)
Dr Andrew Dearden: NHS scheme could be 'seriously destabilised' (Photograph: Wilde Fry)

One BMA expert said the figure could rise as high as 30% for the worst-hit GPs.

Figures obtained by the BMA from government actuaries show doctors' pension contributions could double by 2015. The changes come on top of tax and national insurance changes already set to drive down GP income.

Changes to pension contributions mean GPs earning up to £107,847 could see their pension contribution rise from 7.5 to 13% by 2015.

High-earning doctors paying 8.5% contributions could be forced to pay 15.5% by 2015, the BMA warned.

Dr Andrew Dearden, chairman of the BMA pensions committee, said: 'GPs earning over £100,000 will start to lose their personal tax allowance.

'Higher-earning GPs could incur additional tax changes due to changes to their lifetime allowance. On top of that we have the 1% increase in national insurance contributions.

'Add to that the potential for between 3 and 7% in additional contributions, and that means GPs are losing about 30% of their earnings.'

Jenny Stone, of specialist medical accountants Ramsay Brown and Partners, said take-home income for a GP whose share of practice profits is £100,000 could fall by 24% (see box).


Share of profit: £100,000
Current situation
Take home income: £56,226
With double pension contributions
Take home income: £42,959

Share of profit: £160,000
Current situation
Take home income £83,526
With double pension contributions
Take home income £64,015

Source: Ramsay Brown and Partners

The worst-hit GPs would be those losing tax relief because of restrictions on pension allowances introduced this year.

GPs unaffected by pension allowance caps could still lose around 11%, she said.

The BMA said that plans to raise overall contributions by 3% were unjustified.

Data from the Office for Budget Responsibility show that the NHS scheme will deliver a £10.7 billion surplus by 2015/16.

The civil servants' scheme, which requires far lower contributions than those for GPs, faces a £14.5 billion deficit.

A GP poll revealed that half of GPs could retire if the government implemented pension reforms set out in Lord Hutton's review. Dr Dearden said GPs may choose to invest their pensions elsewhere, leaving the NHS scheme 'seriously destabilised'.

PENSIONS - NHS allowances

Added years and additional pension
Schemes to boost your NHS Pension.

Annual NHS pension uprating factors
Calculating GPs' career-average re-valued earnings.

Early voluntary retirement
Reduced NHS pension for benefits taken before normal retirement age.

NHS pensions
Contribution rates and schemes for Scotland and Northern Ireland.

Pensions rules
Annual and lifetime contribution allowances.

Personal pension plans
Private sector pension schemes.


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