Drs' payrise should be funded by cutting 23.7% govt pension contribution

[eyeses]

The Telegraph today suggests that the Government could fund a significant payrise to Resident Doctors by reducing our surprisingly high payments into their pensions.

"Yet what is often forgotten is that these doctors enjoy bumper pensions worth close to 75pc of their salaries in retirement – and which are guaranteed to rise with inflation each year.
Doctors enjoy index-linked, taxpayer-funded “defined benefit” schemes, many of which pay a proportion of the recipient’s final salary from the day they retire.
Under the NHS scheme, staff contribute between 5.2pc and 12.5pc of their salaries while the state contributes a vast 23.7pc each year.
By comparison, private sector workers, who are almost all enrolled in “defined contribution” pensions where the value of the final pot depends on investment performance, receive a contribution of just 3pc from their employer.
The NHS is paying out nearly £1bn a month in staff pensions, with almost 2,000 staff receiving pensions of more than £100,000 annually – a figure that has more than doubled in a year."

AIBU - No, junior Drs deserve that we fund a big pay rise and huge pension
IANBU - We pay far too much into Dr's pensions and they want the money now

What Resident Doctors don't want you to know about their pay

also in Australia they will have to pay 50% of their salary to tax and they also have to pay out of their salary compulsory private health insurance because the public health system is so shit!!

They are paid well, if they are not happy, they should stop whinging, grow up and get back to work, or otherwise, do something else that is better paid if they think they are so great.

It’s different though, with a private pension, if the market crashes your pension could halve, there is a lot of market risk. For, the public sector there is no market risk because the taxpayer pays.

LOL. I started working in the NHS when I left school in 1977. My bloated, gold-plated pension is £700 a month.

Well, I haven't read all the replies, but I am quite surprised by all the posts saying stuff about low paid NHS or other public service employees. That's a completely different subject.
I only know what I have read, so maybe it's not true. Thanks to PPs saying the pension scheme mentioned is not for newer people (so not for junior doctors presumably?) and NHS pensions are unfunded, which I think means they are the problem of a future govt.
I had thought that choosing to opt out of the pension would only be opting out of your own contribution, not pocketing the employer's contribution, which is what we are talking about here.

I think that it is a surprisingly large employer's contribution, and not really on the radar of people around 30 years old. I think the doctors should be offered the option of swapping up to 20 of the 23.7% employers contribution for pay instead, with the option to swap it back to pension later. Yes that would mean funding it now, but they may have to anyway.

They wouldn’t be able to change the terms for current workers, only for new joiners, so you’d be looking at 40 - 50 years before it made any significant difference.

The “issue” is that many of these schemes are unfunded ponzi schemes with hundreds of billions of liabilities that will be unpayable when our population declines drastically due to the falling birth rate.

Could they not offer it as an option though? An option to take some of that pension contribution as earned income?

At least that would reduce the tax burden on our children and grandchildren.

This genuinely does surprise me - were you in the pension scheme from 1977 until you retired? What % of your final salary does that represent? Did you opt out or something?

I don't doubt you at all just trying to understand. I have a DB pot from working for just 4 years in a final salary scheme on a lowish office admin wage in the late 90s and it's forecast at £2,500 per year so lots less than yours but in sounds like you were in the scheme for 10 times the years I was so I can't get it to make sense.

The point is that would cost more money and would not represent any immediate savings to the NHS or Government.

I totally agree with the strikes.
more and more jobs being given to oversees as opposed to those who have gone through the Uk education system or university.

more and more are now seeking jobs oversees as a result
Qualified nurses who are unable to get a job and are applying as health care assistants in care homes
and yet we need more doctors and nurses? Can Wes streeting explain?

@Mithral It doesn’t make sense. They probably had non working years at he with dc. That’s what I did and of course it lowers pension.

We cannot afford these pensions. The total amount doctors get should be quoted and early retirement options. They simply don’t need to work the years everyone else does. I cannot believe it’s taken Telegraph journalists this long to work out the vast amount we are paying. No wonder foreign doctors want to work here - it’s the ultimate golden gravy train. We cannot have such imbalance and we compare apples and pears in terms of pay packages. The Doctors control the narrative and no one questions it. I’m not sure this money sits in the bank though. How would we transfer future pension payments to payments now?

The NHS pension is wildly generous. DH (consultant with managerial responsibilities) is paid £180k pa and his pension will be worth >£100k pa at 65. Admittedly that includes a few years in the “old” scheme.

An annuity that size would require a pension pot of well over £2 million. Now multiply that by 60,000 (current number of NHS consultants) and it helps to explain why we’re turbofucked as a country.

I benefit personally from the scheme, but I still think it’s ludicrous to offer this kind of benefit, particularly in the context of a 23-odd % raise, without pension reform.

Yes, of course that's what I'm sticking around for! It's not for the joy of working in the NHS..

Don’t forget the untaxed lump sum from the pension too! Holidays for life!

@eyeses The Telegraph today suggests that the Government could fund a significant payrise to Resident Doctors by reducing our surprisingly high payments into their pensions.
I was hoping you meant cut government pensions.
IMHO that would be great answer
And MPs should not be allowed to stand if they've got their hands in pots of money with HMRC in close liason

I realise that the govt would have to find the pension contribution now to offer it as pay, because as a pension it is only an iou, but they'll have to do that for any sort of pay rise. This seems a really sensible option, to save the country future money whilst giving the doctors more of what they want.

Yes also to the more training places, and also (another topic again) more of those places reserved for people we have paid to educate! Otherwise we could fund the payrise by not bothering to have medicine degrees. Oh wait, no, that would be funding the unemployed we could have educated and trained for jobs we need done. OK I've gone off piste a bit here.

I think theoretically it is correct that public sector pensions should come up and end, but practically the poster above is right it isn’t something you can just do because it would be prohibitively expensive.

the only solution is to introduce a 2 tier pension system, closing the DB scheme to new entrants and phasing out the DB schemes as pensioners die off. It would take 50 years

Not the case anymore - I recently rejoined my old firm after 5 years of freelance and the standard pension offer has moved from 5-10% of total salary depending on tenure to 3% of ‘eligible earnings’ which is essentially the statutory minimum and translates to <1% of my salary before bonus. Husband has found the same when interviewing- very few firms offering more than the statutory minimum for new employees in high wage, high demand and senior professional roles. Potentially a response to difficult economic times and redirecting comp to talent priorities (headline salary) over benefits, but it is a far cry from public sector and honestly not sure how anyone builds a sufficient pension on the statutory minimum.

Final Salary scheme shut to new entrants around 10 years ago, its still a db scheme though, just using career average rather than final salary. It's still an excellent scheme, albeit not as good as it used to be.

your proposal would work in a define contribution scheme (most private pensions) where pension payout is based on what you put in, and is also highly variable. It doesn’t work in a define benefit scheme such as the nhs where payouts have little link to what is paid in or market performance.

it is also a terrible idea to make it easy for young employees to opt out of pension, as those years make a tremendous difference in the final pension pot. I have multiple pensions from multiple countries (making it difficult to combine) but one of my biggest pots is the one I set up 22-28 years of age - not a lot paid in, but compound interest means it is going to be 25-30% of my final pot. 10-15% of earnings into pension (combining employer and employee contributions) should be the norm from the beginning of employment

Surely it’s the same for state pension?

pensions (state, public, and private) are all going to have to look very different in a just a couple of decades time. But that’s a bigger issue than just public sector pensions.

It’s not the same for state pension because there is no deficit payment due. The government could just stop paying state pension without penalty.

for a pension fund to stop paying a pension they would have to fund millions likely billions go fund the deficit. In cash, immediately.

accounting standards mean that companies do take the hit for deficit or benefit of growth for their share of pension scheme in their annual accounts. So it wouldn’t necessarily bankrupt the organisation, but finding the cash would be quite something else.

The penalty would be all the people who now can’t afford to live and need the replacement benefits, alongside the admin cost of processing all the claims.

Plus no matter how expensive it is they’ll never do it because it would be the death of their party.