GPs retiring between 2004 and 2006 had their pensions capped after earnings from the new contract rocketed and ministers argued they had to cap pensions to protect the taxpayer.

However, Lord Justice Mitting yesterday ruled that ministers had no power to impose the limit, which was an attempt “to renegotiate an arrangement that had already been determined”.

Dr Hamish Meldrum, chairman of the British Medical Association’s council, said: “We are delighted that the BMA has been vindicated in its decision to challenge the government.”

Doctors looked to the government to honour the deal, he said. The BMA said the cap had so far affected about 3,000 retiring GPs who had lost around £3,000 a year in pension. But the health department said the estimated long-term saving from the cap was £600m.

Mr Justice Mitting awarded the BMA its costs but gave Alan Johnson, the current health secretary, leave to appeal.

Lawyers for the health department argued the scale of the increases risked diverting resources from patients and were “indefensible”.

Ministers acted after GPs performed far better than expected under a new performance-related contract, with average earnings comfortably clearing £100,000. Ministers were also angered GPs took more of their practice earnings as profit in the early years of the contract.

However, Dr Meldrum said there was “a very important principle at stake, which is that when the government makes agreements it should stick to them”.

From:
http://www.ft.com/cms/s/0/45ac7808-f168-11dc-a91a-0000779fd2ac.html

Health Direct points out that labour’s attempt to claw back funds from doctors is a direct result of their incompetent renegotiation of GPs contracts in 2006.