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

I‘m not suggesting they will do it, just answering your question about why it isn’t a “ponzi scheme” like a pension fund.

But it’s still funded by current contributions rather than someone actually accruing a state pension that is sat waiting with them. So it relies on current tax payers income. When we start running low on tax payers we’ll also be running low on taxes to pay the state pensions. So it will still be unpayable in the future.

The semantics are the same, public sector pensions will be unpayable when our working population declines, and so will state pensions.

@Labraradabrador I think they already can opt out, which is tempting when young, but this would not be opting out, but more like having flexible contributions. Both ee and er would still pay in, but some of the theoretical er contribution would appear in the pay packet. In fact it would be much more valuable in the pay packet than opting out, because the ee contribution is so much smaller than the er contribution. It should discourage option out.

I don’t know about NHS but there’s 50/50 in LGPS which seems like a pretty fair compromise. The NHS should adopt similar if they don’t already.

50/50 is your pension contribution is halved, and you accrue half as much pension, so 1/98 of your pensionable pay rather than 1/49. You retain other pension related benefits such as the death in service benefit.

The employee superannuation contributions are also high, 9.8% for an F1, increasing to 12.5% by the time they're on 58k. Some opt out as they can't afford it. Which may please the OP.

Yes. State pensions are going to have to be means tested and this should happen asap. This is the primary thing that is crippling the country financially, along with the failed NHS model of healthcare.

Auto-enrolment needs to be mandatory with no opt out and a similar scheme put in place for those self-employed.

The triple lock should be downgraded to a single lock of rising at the rate of earnings so that older people’s incentive to vote for policies that impoverish those of working age is removed.

And public sector pensions need urgent reform to bring them in line with private sector pensions and ensure that any DB schemes are fully funded by those receiving the benefits from them, removing taxpayer underwriting.

Needing something makes no difference whatsoever if the country can’t fund it. Do you think that people all over the world receive money to fund their retirements just because they “need” it? Nobody has a contractual right to benefits, which is what a state pension is and always has been in law. The terms and eligibility can be changed at any point and there is no choice but to do this because it’s mathematically unsustainable. It’s a question of “when” not “if” these changes will be made.

DB pensions should be abolished for everyone, including the civil service and politicians.

DC should be the order of the day for all. A larger than normal employer contribution to DC can substitute adequately.

Tbh this is a good idea.

Even if there waa a middle grpund like picking 15%.

I thought the governement just matched ty3 contribution. As in if you paid 9% so did they.

This. The NHS pension scheme is insanely generous and unfunded. It is economic suicide. And all the posters that say private sector workers should ask them to provide this too! The reason why a private sector company would never do that is that it’s total madness. That total madness described above is being funded by the taxpayer though. And people wonder where all the money goes!

a) the NHS pension only has the generous lump sum if you’re in the 1995 section of the pension. No-one joining since 2008 has that.

b) anyone can take a tax free lump sum of 25% of their pension pot after 55. The current NHS arrangement is equivalent to that.

I suggest that if you want a DB pension you train for a job that offers a DB pension.

Not just doctors who get 27% contribution but all civil servants. I am a civil servant and my pension is very generous. I also get paid less than what I would in private sector but do I think it could be cut a little? Yes definitely. Even dropped to 25% would save a small fortune.

Then why not accept the offer of extra training spots and prioristing UK doctors - because it is about money.

Civil servants and local government officers always say they would earn more in the private sector, but never try and get these better paying jobs! Because they don’t have to work longer hours and would lose out on pensions never mind they might not actually get the job!

So the NHS does pay that money but they pay it back to the government along with the workers contributions. All those contributions then pay out to cover for the currently retired people. So if you reduced the value of the scheme it would have a big benefit in cash terms in 25-30 years but from a cash perspective all that would happen for now is the government would have to keep funding current retirees but with less coming in from current employees and their employers.

Just to add, as well, if you opt out the scheme currently you regain your contributions but your employers contributions don't come to you, they just disappear.

There is such a lack of understanding around DB pensions and how they compare to DC pensions.

I'm not a doctor but am on a DB pension. My employer (i.e. the state) does not actually pay anything into my pension at the moment. I do not build up a "pot" made up of my contributions and the employer contributions in the way that DC pensions do. Instead, what I pay towards my pension is used to pay the current pensions of retired people in my scheme. All I gain from my contributions is a promise that, in the future when I retire, the state will pay me a pension that is a calculated fraction of my average career salary.

We see articles all the time saying that the government is contribution 20-odd percent but this is purely a manipulation tool used by the media to create negative feelings in those on DC pensions. No actual money is being "given" to those in DB pension schemes because no pot of money is actually building, unlike in DC schemes where you have an actual pot of money ready for you. It's a red herring.

This sums it up in a nutshell. The budget, once again, hammered those of us in the private sector who are trying to save for our retirement. It’s not about seeing who can dive to the bottom fastest; it’s about fair outcomes for ALL hard-working ordinary people.
Once upon a time public sector salaries were lower and pensions better than the private sector. This made the overall package comparable.
Now their salaries are easily comparable for
most of us (except extremely high ranks) but their pensions are gold-plated and then some. The current public sector pension system should be phased out and everybody should use the same method. That way, private sector workers aren’t funding public sector retirement and when the chancellor raids pension funds, he/she hammers everyone.
Of course, it will never happen because politicians benefit from their public sector pensions and so do the civil servants who advise the government.
Revolution anyone?

this is so true. I never understand why public sector works say this. Yes, there is a private alternative for medics or healthcare alllied professions, and consultants for example would be well in demand.

But your average civil servant or local authority worker is going to struggle to move successfully into the private sector. It’s not like it’s an active choice for most.

Are you saying that staff in the private sector don't complain because they bloody well do. They whinge at the drop of a hat.

When it comes to doctors if you pay peanuts and you get monkeys. I'd quite like a talented, dedicated person and teams to diagnose or operate on me. And monkeys is what we'll get if we don't make the profession attractive.

Even a Band 6 NHS worker, only just gets the UK average wage, most will also be paying back student loans (a degree being essential) and staff car parking charges, which many in the private sector don't pay.

Also, very few in the private sector face getting beaten up at work, 1:7 have experienced physical attacks.

I think Doc's are worth every penny & the Govt should negotiate a better offer, after all, they found 3 billion for lifting the 2 child cap, without ensuring any of that extra money goes to children.

Once you ve had your own life or that of loved one bought back to health, your view of Doctors and other NHS workers changes.

Why would the Doctors accept a lower pension, in return for a higher pay rise? their pensions have already been hit after changes in the last decade or so.

Anyone who thinks the pension scheme is so fantastic can always re train and work in the NHS.... many seem to think its a nice cushy number.

Agreed. I looked up the consultant who recently operated on me. His educational background was outstanding.

that man, back at 23, had many doors open to him. He carried on to training as a doctor. Many of his contemporaries walked into hedge funds and will now be earning millloons every year. I bet he’s still friends with them.

this is the alternative for a NHs consultant on £150k (yes I know of course he takes private work)

I think the general public easily forget just how elite doctors really are in our workforce and society.

This is a real problem, but the BMA messaging (e.g.on their website) focuses on pay.

@OhDear111 Same for the private sector workers. They constantly moan and whinge about the public sector pensions but never attempt to get a job in the public sector for these ‘amazing’ pensions. Why? Is it because they know they’d never get the job? Is it because actually they might just realise that it’s harder and hours are longer than the currently want to admit? Never understood the desire for the private sector to belittle, slag off and run down the public sector purely to make themselves feel better for the lack of desire to fight for better pension provisions

ETA: Public sector workers are leaving to join the private sector. However not as many private sector workers are joining the public sector.

Conversely, it’s actually really hard to enter ie the civil service when you work at a senior level from the private sector. The applications and interviews are inaccessible to those not currently working in the civil service and the only viable route in seems to be via consultancy ie pwc

When I started work private sector pensions were far superior to public sector pensions. I joined an insurance company with a non contributory final salary pension scheme that was based on 60ths of your final salary not 80ths. If you worked 40 years you could retire on 2/3rds if your final salary - if you started at age 16 you could retire at 56!

I worked there for 7 years in a junior role and now have a pension of over £400 per month for which I never paid a penny!!
public sector have kept their pensions although not as good as they were - I am a nhs widow and receive 50% of my late husband’s pension- the latest nhs pension scheme only offers 32.5% to widows.