Are the GPs’ pension schemes contributory? (in which …

Comment posted Time to ask what the people will stand: striking GPs have it all ways by Dr Douglas McKenzie.

Are the GPs’ pension schemes contributory? (in which case the issue is at the margins) or are their contracts like civil servants non-contributory? (in which case, I agree there is an issue here and ranks up with lots of other benefits medics get – such as Consultant “A list” supplements.)

The big elephant in the room of course is the possibility that all medics leave the NHS and we end up with a private heath service (that, going by the experience in the USA, will be much, much more expensive than the NHS even with these perks).

Dr Douglas McKenzie also commented

  • Thanks for that BFOandC – though it depresses me further with the thought that our public sector pension liability is even higher than I imagined.

    There is a good article on this here:

    http://www.guardian.co.uk/politics/reality-check-with-polly-curtis/2011/nov/28/pensions-public-sector-pensions

    It confirms that the only major public service pension fund that has capital behind it is the Local Government Workers scheme.

  • Thanks for pointing out that civil servants pensions are now contributory – albeit at a very low rate (less than 4% at the highest levels). They, of course, always had a widows and orphans contribution of 1.5%. The classic pension is still a final salary scheme so much better than pretty much anything available in the private sector.

    The point about the Civil Service pension scheme is that it is not fully funded so future tax payers have to pick up the tab.

    I completely agree that we have to be careful about separating out the Civil Service Pension schemes from that of other public sector workers, most of whom have fully funded, contributory schemes.

    Back to the medics: is their scheme fully funded or not?l Probably yes, in which case our only concern is whether the employer (ie our) contribution is proportional to the benefits produced.

Recent comments by Dr Douglas McKenzie

  • Rustle with Russell
    More utter rubbish from Lynda Henderson. Have you actually spoken to Bob Allen? Whoever told you the story sold you a pup and in your arrogance you cannot admit to be wrong so you make up this story that he was persuaded not to resign.

    Your position is completely untenable.

  • Russell back in the bathtub, now trying to sink Keith Brown’s boat
    I’m afraid you condemn yourself by your own words. I don’t think that anyone reading what you have written here and the language you have used would conclude anything other than that you have a deep dislike for Mr Russell and that dislike is leading you to basically lose all sense of either proportion or impartiality. It doesn’t matter how well (or otherwise) you know Mr Russell you are clearly exercised by your interpretation of his actions and it is leading you well beyond the pale in what I would consider fair comment.

    This vendetta against Mr Russell and the SNP is destroying FA’s credibility and I have to confess that I’m seriously considering whether or not to continue reading FA (which will cheer Malcolm up if nothing else). I for one am becoming increasingly disenchanted by the constant negativity and sheer nastiness that has crept into this blog. I say that with a lot more sorrow than anger because I think that FA could have been great and indeed still could but there has to be a degree of balance, civility and indeed humour. All we are getting here is bile and it is causing me heartburn.

  • Russell back in the bathtub, now trying to sink Keith Brown’s boat
    To be honest, this post clearly shows that you are speaking from your personal dislike of Mr Russell rather than an unbiased analysis of the man. Phrases such as “publicity hungry coward” are well beyond what is reasonable comment.
  • Russell back in the bathtub, now trying to sink Keith Brown’s boat
    You don’t seem to understand the separation of a MSP’s duty to his or her constituency and their responsibilities as a Government Minister.

    Yet again, this is another instance where a member of the Government can do no right: speak up and be condemned as “desperate” or stay silent and be accused of not serving your constituents’ interests.

    It is just as well that Mr Russell has broad shoulders!

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18 Responses to Are the GPs’ pension schemes contributory? (in which …

  1. Are the GPs’ pension schemes contributory? (in which case the issue is at the margins) or are their contracts like civil servants non-contributory? (in which case, I agree there is an issue here and ranks up with lots of other benefits medics get – such as Consultant “A list” supplements.)

    The big elephant in the room of course is the possibility that all medics leave the NHS and we end up with a private heath service (that, going by the experience in the USA, will be much, much more expensive than the NHS even with these perks).

    Like or Dislike: Thumb up 0 Thumb down 0

    • They are contributory (see note added to the foot of the piece) but these pensions are pretty generous and relatively cast iron in comparison to private sector packages. In these days that’s worth a lot.
      One thing is certain, if access to this scheme had not been to doctors’ decided advantage, the BMA would not have fought for this arrangement.

      Like or Dislike: Thumb up 0 Thumb down 0

    • Just a couple of points of factual information:

      Civil Servants pensions are contributory as are teachers, local authority workers and the NHS pension scheme.

      Also last year the Health Service pension ‘scheme’ was in surplus and contributed around £2bn to the treasury.

      Like or Dislike: Thumb up 0 Thumb down 0

      • Thanks for pointing out that civil servants pensions are now contributory – albeit at a very low rate (less than 4% at the highest levels). They, of course, always had a widows and orphans contribution of 1.5%. The classic pension is still a final salary scheme so much better than pretty much anything available in the private sector.

        The point about the Civil Service pension scheme is that it is not fully funded so future tax payers have to pick up the tab.

        I completely agree that we have to be careful about separating out the Civil Service Pension schemes from that of other public sector workers, most of whom have fully funded, contributory schemes.

        Back to the medics: is their scheme fully funded or not?l Probably yes, in which case our only concern is whether the employer (ie our) contribution is proportional to the benefits produced.

        Like or Dislike: Thumb up 0 Thumb down 0

        • The NHS is a PAYG scheme which is funded by the taxpayer and member contributions. There is no capital fund behind the scheme.

          I don’t know how the GP’s commissioning will work but it has the potential to be very expensive (doctors move along to become managers which allows more doctors to come into GP?)

          The medical colleges have been shafting the taxpayer for 250 years and for once a government, Lansley, called their bluff.

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  2. Excuse me but we would not be having these problems if the bankers had not acted fraudulently and recklessly. Have we all forgotten the twisted bankers, why have none of them gone through our court system why are they not locked up behind bar like all other conmen?
    I have never supported unions or strike action but now I think there should be a three day strike action by everyone to show the government who is the majority and who has the largest voice.
    They played the UK people as fools by claiming a fuel shortage and strikes the public fell for it and guess what the government made a shed load of money through increased fuel sales. Now think if the people said stuff you we are having three days off every month from now till Christmas
    LOL

    Like or Dislike: Thumb up 0 Thumb down 0

  3. Pingback: Fewer than 25% of GP surgeries will join industrial action, survey says – The Guardian | Lenta Asia

  4. Nearly all the pension schemes of public sector workers are not fully funded (I believe the Local Authority worker’s scheme is funded) but are schemes where the ‘agreement’ was that when a scheme was in ‘credit’ money would be paid to the Treasury and when it was in ‘deficit’ the Treasury paid money in, to make up the shortfall.
    All the schemes have, in the past, contributed large amounts to the Treasury. In fact in the 70′s and early 80′s the teaching unions campaigned for the Teacher’s Pension scheme to be made fully funded but no Government, of either party, wanted to lose what was seen as a good source of revenue. Remember, last year the NHS scheme contributed around £2 billion to the treasury.
    Also for the last 5 years no new entrant to the Civil Service has been able to access a traditional final salary scheme.
    It is worth bearing in mind that the NHS scheme is not the only scheme to allow entry to those not public servants. Teachers in independent schools can be (and are) members of the teacher’s scheme. Again no Government wanted to change this arrangement. The Tories were concerned that it would make recruitment of teachers to independent schools more difficult and Labour didn’t want to ‘lose’ the income provided by the independent school teachers who were generally paid a higher salary.
    It is very easy to fall for the Government’s propaganda on this matter without thinking through the realities of the situation. Once a final salary pension scheme is closed to new entrants (as nearly all public schemes have been for 5 years or so) then it will quickly become much more ‘expensive’, as no new contributors will be added but the existing accrued pensions will need to be paid.
    The majority of public servants did not want these unfunded schemes but whilst they contributed surpluses to the treasury no Government wanted to lose them. Now, when some of those contributions given to the treasury should be ‘paid back’ they find there is an orchestrated campaign to vilify public servants who have these ‘gold plated pensions’. Remember the average NHS pension currently being paid is around £6,500 and the average Civil Service pension in 2010 was £5,928.
    I know I’m old fashioned but if we are concerned about those who are getting large pensions then perhaps we should resurrect the additional ‘unearned income’ tax?

    Like or Dislike: Thumb up 0 Thumb down 0

    • Thanks for that BFOandC – though it depresses me further with the thought that our public sector pension liability is even higher than I imagined.

      There is a good article on this here:
      http://www.guardian.co.uk/politics/reality-check-with-polly-curtis/2011/nov/28/pensions-public-sector-pensions

      It confirms that the only major public service pension fund that has capital behind it is the Local Government Workers scheme.

      Like or Dislike: Thumb up 0 Thumb down 0

      • Thanks for the link – I hadn’t read it. I noticed particularly the claim (not contested) that the Teacher’s Pension scheme alone had contributed over £40 billion more than it has paid out. This underlines the point that various Governments were happy to use the schemes as revenue providers in the ‘good times’ but are now unwilling to fund them in the ‘bad’.
        People should not blame public servants for the need now to fund pensions but successive Governments who used public servants contributions as an annual additional revenue.

        Like or Dislike: Thumb up 0 Thumb down 0

        • This is quite dreadful stuff BFOandC. The average teacher’s pension is £10,858. There are almost as many pensioners, 567,000, and dependants as there are active members. The total contribution is 20%; the member pays 6 and the local authority 14%.

          To contribute more than is being paid out annually, today, the contribution from each teacher must be £10,000 which is 20% of salary or, therefore, each teacher is paid over £50,000. Is that likely?

          That is only half the story because future liabilities are enormous. Many government pension schemes had, some still have, very favourable benefits. The actuarial position whilst membership was growing with few liabilities encouraged profligacy on an eye watering scale. The fireman’s pension scheme is an example. Eventually, they get caught.

          The current capital liability of the average teachers pension in payment is approximately £0.4m (many retired at 60 or less) and thus the sum total is no less than £200bn or 15% of UK GDP. The future liability is going to be very much greater; I’ve no idea by how much because the liabilities are currently discounted against sovereign debt which is very, very low – the Government Actuary uses arcane techniques not available to the private sector to take a measured long term view (complete bollocks, of course).

          There are a few people who understand just how bad a deal the doctor’s pension is for the taxpayer. We’re inured to the offensiveness of it. It’s been going on since the end of WWII so what? Nobody’s listening or are protecting their own legalised piece of theft from the public purse, particularly the BBC. ForArgyll deserve a great deal of credit for this article.

          Some of the recent data is here
          http://www.parliament.uk/Templates/BriefingPapers/Pages/BPPdfDownload.aspx?bp-id=SN00405

          Like or Dislike: Thumb up 0 Thumb down 0

          • It is really dreadful stuff that (as your link makes clear) Governments refused to make the Teacher’s Pension scheme a fully funded scheme.
            I am also (perhaps wrongly) very suspicious that the Government has refused, as part of their current changes to pension arrangements, to have an independent valuation of the teacher’s scheme.
            That suspicion is confirmed when your link quotes a National Audit Office report in 2010 that following the changes made in 2007/8 ‘overall costs to taxpayers will stabilise at around 1.0 per cent of GDP, close to their current levels.’

            Like or Dislike: Thumb up 0 Thumb down 0

  5. You know what’s “offensive” HansBlix?
    Your,and the UK govs. faux outrage at public sector workers pensions.

    Give me a break! There are countless bankers,hie heed yins sitting on obscene ammounts of dosh with much of it gleaned legally or illegally, depending on your definition,from the hoi polloi of the world. Cheating and sneaky deals are what is going on. Has anyone been convicted of fraud with regard to the banking collapse? NO! and with no sign of any recourse in the pipeline either.

    So, I will be backing ALL public sector workers and damn anyone who accuses them of “..theft from the public purse…”. Sheer hyprocracy.

    Like or Dislike: Thumb up 0 Thumb down 0

      • Ah! Herr Blix= the spelling police. More important than breaking a contract??
        for e.g.

        I agree a contract with you to sell X goods for X money.
        The invoice is sent, as agreed, but you now tell me the contract is to be renegotiated!
        Furthermore, you DO NOT tell me WHY. So, no option for me to understand the reasons, or argue my case.

        This is what is happening NOW to public sector pensions.
        How “two-faced” can this UK gov. be??????

        Like or Dislike: Thumb up 0 Thumb down 0

        • Morag, the contract analogy is interesting, because if circumstances or the specifications of the goods change then the contract is renegotiable.
          The pensions offers were originally made on a set of assumptions, life expectancy being one of them.
          The government should honour it’s side of the original offer by paying full pensions, provided the public sector workers honour their side and die at age 76.

          Like or Dislike: Thumb up 0 Thumb down 0

  6. If GP’s are classed as self-employed then they should have a defined contribution pension scheme instead of a defined benefit pension scheme.

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