28 Jun, 12 | by BMJ Group
Doctors don’t strike about employee pensions in the USA. This is because many of them are not employees and few have defined pensions from the employers. Most doctors are in defined contribution schemes. Defined contribution means that the employer contributes to an investment fund (which will include some combination of bonds or equities with additional choices of investments such as small cap or foreign markets). Henceforth the doctors participate in the market. In the academic sector most doctors have their pensions held with TIAA_CREF. So after my only academic year my account was worth $13 000. After a turbulent 22 years this had compounded to $33 000. Additional to this contribution you can make personal contributions to programmes called IRAs and Roths, similar to SIPP’s and ISA’s. The mailman is pleasantly unworried when he delivers a letter marked “IRA statement.”
Employers of salaried doctors who offered benefit schemes have largely discontinued them. Any state and local authority employers that continued defined benefit schemes are now repenting their promises. Local police and firefighters especially were offered generous defined benefit packages, often in lieu of increased salaries. These injudicious sunny day promises have returned to chill them in this economic winter. With some large authorities (like Harrisburg in Pennsylvania, and recently Stockton in California) in bankruptcy, the pensions promised may be reduced to fractions of their nominal value. As a state employee I was offered a conversion several years ago. Would I like to partially convert from my present benefit scheme of inflation indexed 2% of averaged last five year salary times years worked? Instead I might transfer to a 1% scheme with compensation such as a payment eligible for personal pension management, an option to qualify after ten years instead of twenty, and an option to retain state health insurance? To me, with a recent history of a serious cancer diagnosis and the uncertainty of the future, the offer seemed attractive. My subsequent pleasure in surviving the cancer is only slightly tempered by realising the benefit I left behind.
Federal government employee schemes tend to continue to offer some degree of defined benefit but with increasingly restrictive conditions—including minimum qualification periods of 20 years or so. It seems that involuntary servitude may now be a requirement to obtain a conventional defined pension goal.
So from the other side of the pond doctors striking for pension rights has the irrelevance of UK sailors mutineering for their rum ration—an interesting anomaly that, like guaranteed life time employment, is now part of the US history books. Possibly the only consequence is that it plays into the concern of the public that any health system involving more government employees may produce new dangers as well as new benefits.
P.S. the strike zone is a baseball term.
Andrew Brunskill was the medical director of the State of Washington Uniform Medical Plan for ten years and then completed a PhD in Health Services Research. His MB, BS is from Newcastle and his US boards qualifications are in public health and pediatrics.