Self-employed doctors are facing an increase in their pension bills of up to £7,000 per year, after the government increased employer contributions to public sector schemes.
The figure was revealed by local branches of the British Medical Association, which are proposing that the union should object to this change.
The issue is that while GP practices will receive additional funding from the government for the increase of the employer contribution rate from 14.3 to 20.6 per cent from April 2019, self-employed doctors aren’t employed by the NHS directly.
This means if they are part of the pension scheme they have to come up with the extra contributions.
Rates are set to increase up to 13 per cent this year in public sector schemes, due to lower growth in the economy, with the exact amounts depending on the particular scheme.
The rates will be paid from April 2019 to the end of March 2023, and the government's actuary department will calculate the employer contribution for each scheme as part of its valuations.
This comes after the government announced in September it would be changing the rate used to calculate the liabilities of public sector schemes "to reflect the Office for Budget Responsibility’s long-term growth forecasts".
The topic will be discussed at the BMA annual representative meeting – the union’s main policy-making body – which is set to take place in Belfast in June.
According to Sir Steve Webb, former pensions minister and director of policy at Royal London, "this is another example of how the bizarre accounting fictions of the public-sector pension schemes is having an unwelcome real world example".
He said: "In most cases, the government is taking with one hand in the form of increased employer contributions and giving back with the other in the form of higher funding.
"But for those who miss out on the higher funding, this represents a huge, and presumably unintended, additional burden. This anomaly needs to be resolved if even more GPs aren’t going to be put off by pension issues."
Concern about doctors' pensions has increased significantly since the introduction of the tapered annual allowance in 2016.
This gradually reduces the allowance for those on high incomes, meaning they are more likely to suffer an annual tax charge on contributions and a lifetime allowance tax charge on their benefits.
The tapered annual allowance means that for every £2 of income above £150,000 a year, £1 of annual allowance will be lost.
It emerged in December that the number of members leaving the NHS Pension Scheme was five times higher than that seen by other public pension funds.
maria.espadinha@ft.com
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