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Junior doctors have landed a £177,000 pension boost… and it's you who will pay the £13bn bill, says JESSICA BEARD


Junior doctors have each been handed a £177,000 pension boost thanks to the Government’s pay deal that will see their earnings rise by a colossal 22 per cent, The Mail on Sunday can reveal.

The true cost of this pay rise for 75,000 medics could add up to an extra £13 billion bill for taxpayers to fund their generous pensions, our analysis finds.

The boom for young doctors comes as pensioners see their income cut, while private sector workers brace themselves for a tax raid on their retirement savings.

Chancellor Rachel Reeves admitted ­’difficult’ cuts were urgently required to fund public sector pay rises of an estimated ­£9.4 billion. But she failed to address the extra pensions bill taxpayers will shoulder as a result.

Junior doctors take part in a rally outside Downing Street in June. They have now each been handed a £177,000 pension boost thanks to the Government's pay deal

Junior doctors take part in a rally outside Downing Street in June. They have now each been handed a £177,000 pension boost thanks to the Government’s pay deal

Junior doctors will see their annual retirement income grow by £8,852 on average following the pay deal when accounting for 1.5 per cent inflation, calculations for this newspaper show.

Over 20 years of retirement, this adds up to an extra £177,031 in pension income, a calculator built for The Mail on Sunday reveals.

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

the NHS.

‘This increase helps mitigate the retention issues that have plagued the healthcare system and ­recognises the critical nature of this section of the workforce in serving the nation’s needs.

‘These doctors are the future consultants and specialists and supporting them now ensures a well-trained and motivated workforce, which should 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 into career-average pensions that grow by 1/54th of their salary a year and will pay out a proportion of their salary until they die.

This means the youngest junior doctors in their first year – whose salaries will rise by more than 24 per cent over two years from £29,384 to £36,616 according to the British Medical Association – will accrue an extra £134 of pension income for each 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 will rise by £12,027 to £70,425, will see their pension income grow by £191,243 in retirement.

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

Even still, some medics want the pay deal to be rejected and are pushing for more industrial action unless ministers cave in to their demands for a 35 per cent rise. This would amount to a £282,000 pension boost for the average junior doctor at a total estimated cost of £21 billion to the taxpayer.

The pushback comes as an insult to the rest of the UK workforce, who can only dream of such pensions and will have to fund them.

Former pensions minister Guy Opperman has previously admitted public sector pensions were ‘unsustainable’ and need reform.

Baroness Ros Altmann, also a former pensions minister, says: ‘Public sector workers don’t ­realise how generous their pensions are and the full cost that is paid by taxpayers to fund them.

‘Meanwhile, the Government are 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 announcing the pay deal, the Chancellor stripped 10 million pensioners of their ­winter fuel allowance – the first in a series of cuts she said would help shore up public finances.

Vital fuel money will be means tested from this winter and restricted to those on pension credit. The move is expected to save £1.5 billion a year.

Yet, the total pension boost for a single junior doctor could pay for the annual £300 winter fuel allowance of 590 pensioners today.

Baroness Altmann says: ‘It’s wrong to try to balance the books off the backs of pensioners. Many will really struggle to cope. It is a serious error of judgment that suggests the Government sees pensioners as an easy target to raid.’

Baroness Ros Altmann, also a former pensions minister, says: 'Public sector workers don¿t ­realise how generous their pensions are'

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

Dennis Reed, of over-60s campaign group Silver Voices, says: ‘Money can be found to pay for what may be justifiable pay increases for public sector workers but a far smaller amount of money cannot be found to help with essential pension benefits.

‘Pensioners can’t go on strike so we are a softer target. At the Chancellor’s address, no one else was called upon to make a sacrifice.’

Reeves has already confirmed the government will raise some taxes in October’s Budget. Labour has promised not to raise income taxes, National Insurance or VAT.

With little else to target, she is expected to mount a tax raid on retirement savings, inheritances and assets (see pages 50-51).

The pension pots of private sector workers are likely to be among the first casualties. Some Left-leaning think tanks are urging Reeves to pilfer what they deem easy pickings.

This could further stretch the already huge gulf between public and private sector pensions.

Up to 72 per cent of workers are under-saving for even a moderate pension, according to the Pensions and Lifetime Savings Association. Most of these have private sector pensions.

Analysis for Wealth has found that for every £1 saved by a worker into a pension, healthcare workers in the NHS receive £5.57.

Yet most workers in a typical ­private sector pension could get as little as £1.75 for each £1 they set aside – less than a third of that enjoyed by NHS workers.

  • Share your views: jessica.beard@mailonsunday.co.uk

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