Junior doctors in England could get a guaranteed pension of nearly £125,000 a year once they retire, analysis has suggested.
The latest five-day strike by the British Medical Association’s junior doctors, who voted to call themselves resident doctors last year, ended on Wednesday. They say there is an “existential crisis” in the medical profession and are demanding more training contracts and a 26 per cent pay rise.
Analysis of their pension scheme has found that they can expect to enjoy a retirement pot far more generous than most private sector workers.
The wealth management firm Quilter, on behalf of The Times, found that a doctor starting postgraduate training this year who works for 40 years and reaches consultant level will build up a pension worth nearly £125,000 for every year of their retirement.
Under the NHS pension scheme, from 2015 doctors accrue 1.85 per cent of their annual salary each year to be locked away for their final pension entitlement.
Doctors’ pensions are also topped up each year through something called “revaluation”, an increase in line with inflation, plus a further 1.5 per cent.
• How much do junior doctors really earn?
Resident doctors start the first year of postgraduate training, called foundation year 1, on a basic salary of £38,831, which rises every year up to £73,992 for registrars in specialist training.
After ten years, a doctor aged 23 starting foundation year 1 in 2025-26 will have already built up a pension entitlement worth £11,906 a year in retirement.
If they become a consultant, and remain in that role until they reach the age of 65, they could be guaranteed an annual pension of £124,363. By retiring at 65, three years before the NHS pension age, a consultant would face a 15.5 per cent reduction in their entitlement, giving them a final pay out of just over £106,000 a year.
John Ralfe, an independent pensions consultant, said that the 2015 NHS pension scheme was more generous than previous schemes. He added: “In particular, there is no cap on the maximum number of years you can be in the scheme accruing new benefits. If you continue to be employed, you can build up your pension, and this change was made to stop people leaving.”
In the private sector, a worker who had saved a £1 million in a defined contribution pension pot could hope to purchase an annuity worth about £50,000 a year, based on current rates, which have hit record highs in recent years.
‘Missing’ records and a pension cliff edge
While the NHS pension may be generous, it shows “little evidence” of being effective in improving recruitment or retention of staff, according to a report from the Institute of Fiscal Studies.
Graham Crossley, an expert in NHS pensions at Quilter, said that while the pension scheme was “undeniably very valuable”, the benefits were only enjoyed after decades of “irregular hours, high responsibility and long service”.
He added: “For most clinicians, what really matters is whether their overall remuneration provides fair day-to-day financial security and supports them to stay in the NHS for the long-term.”
However, experts have said that poor record-keeping has left thousands of NHS employees in the dark about how much their pensions are actually worth.
The latest strike lasted five days
RAID NECATI ASLM/ANADOLU/GETTY IMAGES
Katie Collin, partner at the specialist medical accountancy firm Ramsay Brown, claimed that “as many as 60 per cent of our clients have missing pension records”, leaving them with “no concept” of how much their pension is worth or how much it could grow.
Collin said some of her clients were missing “as many as five years of records” but the bodies responsible for handling the pensions “take months to even acknowledge” queries about missing records.
Those who earn a taxable income of more than £200,000 are hit with extra tax charge, which, according to the BMA, creates a “cliff edge where earning as little as £1 more can result in an additional tax bill of £22,500”.
What do junior doctors really earn?
According to the Nuffield Trust, a healthcare think tank, NHS junior doctors’ pay is “above the median” for the wider labour market. Doctors who undertake specialty training earn salaries higher than nine in ten people in the wider workforce.
A first-year foundation doctor earns £45,900 on average, including overtime and higher rates for nights and weekends, rising to £80,500 for a specialty registrar doctor.
A major contention for the BMA during the strikes has been pay. The union has calculated that real-terms pay for junior doctors has fallen 21 per cent since 2008.
However, the BMA uses the retail prices index (RPI) measure of inflation in its calculations. The Nuffield Trust found that using the more widely accepted consumer prices index (CPI), resident doctors’ pay has only fallen only 4.7 per cent in real terms since 2008 and has risen by 7.9 per cent in real terms since 2015.
Times analysis shows that since 2010, wages in the private sector have increased by more than 7 per cent while junior doctors have seen their salaries fall by 10.7 per cent, despite a recent uplift in wages.
Using The Times’ wealth analysis tool, we worked out what junior doctors earned compared to other medical professionals and other people their age, living in their area.
A first-year resident doctor, on the average total salary as calculated by the Nuffield Trust, would be earning more than 72 per cent of the UK workforce and more than 70 per cent of those in a similar age bracket.
However, they could earn up to £52,674 in Australia, a fact that the BMA has previously argued is causing a brain drain from the NHS.
How does it compare?
Speciality registrar doctors fare even better relative to their peers. A doctor on this average salary for this level of experience would be in the top 10 per cent of earners in Britain. However, they could be paid up to £94,451 if they worked in Australia, or £116,538 in the United Arab Emirates.
When compared with other graduates, doctors — in pay terms at least — have a good deal.. Lucina Rolewicz, a researcher at the Nuffield Trust, said: “One year after graduation, [doctors] were higher than the upper quarter range for any other subject. Ten years after graduation [their salary] was still greater than the median for any other subject studied, with the exception of economics graduates.”
The benefits increase over time, she said. “If they do reach [the level of] specialty registrars, their earnings are higher than the salaries of around nine and ten of the workforce in England. And once you get even further than that, to consultants … they would sit between the 98th and 99th percentiles of all workers in England.”
Dr Vishal Sharma, chair of the BMA pensions committee, said: “This highly misleading and implausible modelling is based on improbable assumptions such as a resident doctor always working full time for 43 years when the simple truth is that given the physical and mental demands of a career in medicine, many do not and the modelling is simply not credible given the changes many will make to their working patterns, maternity leave and to provide childcare for example.
“Moreover it simply does not align with the real careers in medicine for many resident doctors and when they currently retire, and is a huge distraction from the real issue of how many resident doctors are facing an uncertain future due to the lack of training posts for them and the fact that high levels of stress and burnout, linked to the pressures of working in an understaffed and underfunded health service, mean many reduce their working hours or leave the NHS altogether.”