Young doctors get £177,000 pension increase… and you’re the one footing the £13bn bill, says JESSICA BEARD

The Mail on Sunday reports that each of the junior doctors has received a £177,000 pension increase under the government’s pay deal, which will see their salaries rise by a whopping 22 per cent.

Our analysis shows that the real cost of this pay rise for 75,000 doctors could amount to an extra £13 billion for taxpayers to fund their generous pensions.

The boom for young doctors comes as retirees see their incomes fall, while private sector workers brace for a tax attack on their retirement savings.

Chancellor Rachel Reeves admitted that urgent “tough” cuts were needed to fund an estimated £9.4bn pay rise in the public sector. But she failed to address the extra pension bill taxpayers will bear as a result.

Calculations for this newspaper show that the annual pension income of young doctors will rise by an average of £8,852 after the salary deal, taking into account inflation of 1.5 per cent.

A calculation tool for The Mail on Sunday shows that over a 20-year pension period this adds up to an additional pension income of £177,031.

Graham Crossley, NHS pensions expert at Quilter, maker of the calculator, and supporter of the pay deal, said: ‘The 22 per cent pay rise for junior doctors is a crucial step towards addressing several pressing challenges facing

the NHS.

‘This increase will help address the retention issues facing the healthcare system and recognize the critical role this segment of the workforce plays in meeting the nation’s needs.

‘These doctors are the future advisors and specialists. By supporting them now, we ensure well-trained and motivated employees, who can also benefit from a good pension package.’

The NHS pension scheme, one of the most generous in the country, pays a guaranteed income in retirement that rises annually with inflation. Younger doctors save for an average pension that grows by 1/54th of their salary per year and pays out a portion of their salary until they die.

This means that the youngest junior doctors in their first year – whose salaries will rise by more than 24 per cent in two years from £29,384 to £36,616 according to the British Medical Association – will build up an additional pension income of £134 for every year worked. By retirement, this would add £7,874 to their annual pension income – £157,475 over 20 years.

The most experienced junior doctors, whose salaries rise by £12,027 to £70,425, will see their pension income increase by £191,243 during their retirement.

These taxpayer-funded pensions are far more valuable than modern private defined contribution pension plans.

However, some medics want the pay deal rejected and are pushing for more strikes unless ministers give in to their demands for a 35 per cent increase. This would equate to a pension increase of £282,000 for the average junior doctor, at a total estimated cost to the taxpayer of £21 billion.

This backlash is an insult to the rest of the British workforce, who can only dream of such pensions and will have to fund them themselves.

Former Minister of Pensions Guy Opperman previously admitted that public sector pensions are ‘untenable’ and need to be reformed.

Baroness Ros Altmann, also a former Pensions Minister, said: ‘Public sector workers don’t realise how generous their pensions are and how much taxpayers pay to fund them.

‘Meanwhile, the government is punishing pensioners who have very little above the state pension. They are stacking the cards further and further in favour of public sector workers.’

Minutes after the finance minister announced the wage deal, she cut 10 million pensioners from their winter fuel allowance, the first in a series of cuts she said would help shore up government finances.

Essential fuel money will be means-tested from this winter and restricted to those on pension credit, with the move expected to save £1.5bn a year.

Yet the total pension increase for a single young doctor could cover the £300 annual winter fuel allowance that 590 pensioners receive today.

Baroness Altmann said: ‘It is wrong to try to balance the books on the backs of pensioners. Many will be really struggling to make ends meet. It is a serious error of judgement which suggests that the Government sees pensioners as an easy target to plunder.’

Baroness Ros Altmann, also a former Pensions Minister, says: ‘Public sector workers don’t realise how generous their pensions are’

Dennis Reed, of the over-60s campaign group Silver Voices, said: ‘There is money to be found to pay for perhaps justifiable pay rises for public sector workers, but there is not a much smaller amount to be found to help with essential pension provision.

“Pensioners can’t strike, so we’re an easier target. The Chancellor’s speech didn’t call on anyone else to make a sacrifice.”

Reeves has already confirmed that the government will raise a number of taxes in the October budget. Labour has pledged not to raise income tax, national insurance or VAT.

With little else to do, she is expected to launch a tax attack on pension savings, inheritances and assets (see pages 50-51).

The pension pots of private sector workers are likely to be among the first victims, with some left-wing think tanks urging Reeves to steal what they see as easy to obtain.

This could further widen the already large gap between public and private sector pensions.

According to the Pensions and Lifetime Savings Association, up to 72 percent of workers are not saving enough for even a moderate retirement, most of whom have private sector pensions.

Analysis for Wealth found that for every £1 a worker saves for their pension, NHS care workers receive £5.57.

Yet most workers in a typical private sector pension fund can get just £1.75 for every £1 they put aside – less than a third of what NHS workers enjoy.

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