Sláintecare- Can it make financial sense for a consultant?
The recent draft publication of the Sláintecare contract has certainly raised eyebrows among medical consultants. There has been reports in the media that consultants are not exactly overjoyed with the suggestions on patient advocacy (needing firstly to be reported through their clinical director) and the lack of intellectual property rights (basically the consultants will have none). It is important to emphasise that this is just a draft publication and this has been published without any engagement with the IHCA or IMO. Indeed, previous contracts took years to negotiate so there is probably still a lot to play for.
One of the cornerstones of the contract is the new public-only contract. This will replace the current A contract whereby consultants are not permitted to engage in any private practice. According to reports the initial salary will be €189,000 which will rise to a range of €220,000 to €252,000 by July 2022. This figure of €252,000 is important as this was the salary for an A contract before the emergency FEMPI cuts to pay that were initiated in 2009. It is expected that all consultants on A, B and B* contracts will have their pay restored to 2009 levels by July 2022 to the following
- A contract €252,000
- B contract €231,000
- B* contract €199,000
This new Sláintecare contract is not going to be overly attractive to any consultant who has built up even a moderate private practice. However, there are two groups that might be eyeing this with more interest. Firstly, the consultants who are approaching retirement and want to dial down private practice. Assuming they are permitted to move to the new Sláintecare contract they could increase their final salary pension. If the switch is made within 3 years of retirement the salary used for pension purposes is a weighted average of the salary over the last 3 years. Therefore, it could lead to a meaningful increase in pension (subject to Revenue excess tax rules). We have seen this to be the case for consultants moving from a B* contract to a B in the past.
The second group who could benefit from this is younger consultants who were employed on less favourable terms. Consider a consultant aged 42 who is currently on a C contract (4th part of the scale). They would earn €129,000. The consultant has a small amount of private work and is considering the merits of the increased earnings from the Sláintecare contract. It is quite straight forward to understand what needs to be earned privately to match this. However, they are also curious on the enhanced pension benefits of the Sláintecare contract.
Consider the following:
- Member of the final salary scheme
- Expected retirement age of 65
- Will receive up to a maximum of 5 professional added years at retirement.
- Accrued 10 years of service to date
Based on the above they can expect to receive the following at retirement:
Current C Contract
- Lump sum €183,000
- Annual pension €49,020
New Sláintecare Contract
- Lump sum €359,000
- Annual pension €107,000
The figures are in today’s money terms and salary increases in the future will impact this. The above assumes class A PRSI and that both salaries increase at the same rate in the future. This also omits any tax charges due to funds being over the standard fund threshold.
There are a number of items to consider such as increments whereby the consultant on the C contract could expect to reach the maximum 9th point on the scale and earn an increased salary of €151,000. However, the difference in pension is considerable and while each individual case will have its own merits, it is nonetheless worth considering the options.