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Autumn statement is mixed bag for doctors

Posted on 6 December 2012 by Jon Ford  6 comments

So, after all the speculation comes the Autumn Statement with, at best, a mixed bag for doctors.

The much feared abolition of higher rate tax relief on pension contributions failed to materialise as did the forecast draconian reduction in the annual allowance to £30,000. But the annual allowance was reduced to £40,000, and the lifetime allowance was cut to £1.25m. The former will apply from 2014-15 and past experience suggests the latter will come into effect later.

Early estimates suggest that around 21,000 NHS staff will be adversely affected by these changes, with the impact by no means restricted to higher paid individuals.

There will be some form of protection, as happened last time the allowances were changed, but details of this have yet to emerge. This is unwelcome and demotivating to those charged with maintaining the population’s health, coming on top of the plethora of other proposed changes to the NHS pension scheme.

On the plus side, the Chancellor confirmed that public sector pay rises would be available this coming year — albeit restricted to an average of 1%.

There was also some good news for the wider NHS. The spending plans outlined in the 2010 Spending Review are maintained and the health service has been spared the explicit 1 and 2% resource cuts levied on other spending departments to let the government afford its priorities.

The government also accepted the reports on local pay — something the BMA has lobbied hard on — from the pay review bodies. The Chancellor agrees there should be no new centrally determined local pay rates or zones but instead greater use of existing flexibilities. The Doctors and Dentists Review Body was not charged with this particular remit but many doctors feared there would be ‘read across’ from the NHS Pay Review Body that covers Agenda for Change staff, who were particularly at risk from the threat of local pay.

A cold financial wind seems to be blowing for everyone at the moment, including all higher earners. Never mind autumn, it feels like winter.

Did George Osborne deliver what you were expecting? Can some respite on local pay and protection for NHS spending go any way towards balancing out the reduction in the pension allowance?

We are interested in your views, so please comment below. And read our news story for more analysis. 

Jon Ford is head of the BMA health policy and economic research unit

Posted in:  Pensions

Tags:  pensions westminster parliament pay nhs

Comments

  • Rgk

    5 December 2012

    It seems the government is doing all it can to turn the scheme from being in surplus to deficit. Older drs. In their 50s often contribute £25000-30000 PA into the pension scheme. If a large number retire early or cease contributions. The scheme will quickly turn to deficit. The governement will have turned a surplus into a deficit for very short term (if any) gain. Very short sighted.

  • Dr Will

    6 December 2012

    So much for a positive meeting with the DoH over pensions by our new leader last month. The mandarins must have been laughing out loud - another enormous chunk of our pensions down the tube and no action being taken. Are we a Union or a coffee morning chat room?

  • A Evans

    7 December 2012

    Increasingly senior doctors are voting with their feet. Why suffer the misery of the UK when you can spend the latter part of your career in a warm climate and work for a government that appreciates your skills. In just over 1 year 25% of all senior award holders in Scotland have vanished abroad or retired (evidence from SACDA to DDRB). This new change to pensions focuses the mind and maybe it's time for a personal rethink?

  • R Hughes

    7 December 2012

    My partners in their 50s were already exploring leaving the NHS, as they approached their lifetime allowance. This will hasten their exit. With very few full time career GPs to replace them, we are heading for a car crash in manpower. Morale for those of us left is going down the pan.What are our plans to address this?

  • Dr Prasad

    9 December 2012

    How does one go about calculating the impact of the change in Annual and life time allowance?

  • Andy Blake, BMA head of pensions

    10 December 2012

    Examples of how the reduced Annual Allowance (from 2014) will impact benefits will be up on the BMA website soon.
    In answer to R Hughes, before the Autumn statement we had concerns about the manpower issue as a result of the Government's public sector changes (due to affect unprotected NHS pension scheme members in 2015) and its previous Lifetime Allowance and AA reductions.
    As pointed out, this recent announcement — which applies to UK taxpayers not just doctors — will hasten the exit of those who had been delaying, and will heighten the problem. We will continue to highlight the issues of loss of expertise and resources in our discussions with Government.

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