I was so upset and incensed by the reports and distorted statements made in the media on the doctor’s strike that I felt the need to make an extra comment blog, I have no personal involvement with the NHS except as a patient but do have a high regard and from my knowledge of pensions, know they are not treated fairly.
The one day strike by doctors is over with various claims being made on its success or lack of it, particularly by the Government which are irrelevant. Doctors and nurses are a dedicated service and it is not surprising that few took drastic action, what is important is that they felt the need to, resulting from Government failure.
What was more disturbing were the various comments and claims being made by the Government, particularly the Health Secretary, it was almost like the juvenile question time with point scoring and wild divisive accusations, whereas doctors comments were restrained . To quote the main ones stated on television and in the media (Daily Mail):-
“Andrew Lansley today attacked striking doctors, saying the pension deal they want would come at the expense of lower-paid NHS staff. The comments followed his revelation last night that pension contributions for doctors have cost the taxpayer £67billion.Doctors themselves have only paid £17billion towards their retirement. Mr Lansley revealed that the public were funding 80 per cent of doctors’ pensions, and the total cost of the pension pot of all working and retired doctors is a massive £83billion.”
There is no information available to justify these claims, all the figures available from Government sources and the OBR suggest the opposite with NHS in surplus. They could only have been designed to promote anger and envy. They show a complete lack of understanding of pensions which appears to be prevalent in the Government and such claims need to be justified by facts.
They need to make up their minds whether Public Sector Pensions are a pension scheme, a benefit, a tax or a charity (and for that matter also State Pensions). All contributions are linked to pay and as a result they would expect to draw pensions also linked to pay; it is now generally accepted that final salary schemes are subject to abuse, mainly due to rapid pay increases just before retirement.
This led to unfairness, but the biggest area is between the majority contributors and the Civil Service/ others who originally paid nothing, then increased in 2008 changes to 2% and in current proposals will still be subsidised. Higher paid doctors will pay 14.5% whilst those in the Civil service only 9%.
It is claimed to be the same percentage rise, but this does not make it fair. Doctor’s pay is given at £148,000 with a pension of £68,000 (not supported), at 14.5% this would give contributions of £21,460, which in a modest pension scheme should alone yield their pension over 40 years. In addition there are SERP’s rebate of some 5.1% and Employer contributions currently 7.3% , plus the additional years saving to age 68.
There is no published evidence to support the claim that doctors or NHS pensions cost the taxpayer, the scheme is in surplus by some £2bn annually; forward population projection suggest this could occur in the future but this is only due to the unfunded nature of the scheme.
There is no clear separation in State accounts for Employer’s contributions and NI or SERP’s in the Public Sector, they could in a distorted manner be treated as a cost to the Taxpayer but are in fact Employer’s costs. There is also a tendency to include the State pension as part of the scheme benefit.
The urgent need is for the unsubsidised pensions of NHS, Teachers, Police, Fire and Local Government to be taken outside State control and put into independent Super Trusts on a firm Pension footing and treated in the same manner as Private schemes as regards Funds, assets and liabilities, i.e. as fully funded schemes.
This would require the State to find those assets, whether they be in Property, Pension Bonds or the like; the PS liability is given at £1,200bn some of which is Civil Service etc.; at 4% return this would give £48bn cost per year, much greater than the latest pension cost figures of some £24bn.
Some compromise transition period would obviously be needed and existing pension liability and subsidised areas could be separated off. However this is in fact the taxpayer repaying money borrowed over a long period of time, part of the National debt.
There is a growing trend to consider the redistribution of wealth within Pension schemes and also to limit personal choice, mainly due to the failure to recognise them as personal savings. Pensions are not the vehicle for such charity, although it could be done in a limited way with member’s agreement.
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