Check your 2005/6 pension payments as soon as you can
There is an important moment in the financial year that should not be ignored, says Dr John Couch
I cannot remember a single moment in my career so far when I have been bored. Stressed yes, bored never.
Most of us thrive on this stress or we would all become dermatologists. But being under pressure all the time can lead to slips being made, such as ignoring important moments in the financial year. One such moment has just arrived. It should be addressed urgently.
I am referring to the final stage of the pension year. This may elicit groans from readers – but try to remember that the money you pay towards your NHS pension is actually a large chunk of deferred income.
Indeed the current 6 per cent employee contribution will rise to 8.5 per cent from April 2008. Your pension will also finance the bulk of your retirement for, on average, over 20 years.
For GP partners this is the second year of 'superannuation certificates'. As superannuation is now paid on NHS profits, these depend on practice accounts. In turn these are finalised several months into the next financial year. The superannuation certificates reconcile the interim amounts paid quarterly 'on account' during the previous tax year.
Increased risk of delays
Until these are agreed the PCT will hold on to all of the previous years' payments, so your future pension is not yet credited with any 2005/6 payments.
The new certificates are being drawn up by your accountant. With typical bureaucracy the form is almost twice as long as last year, increasing the risk of delays.
The key point is that any balancing payment must be made to the PCT before the end of this tax year to qualify for tax relief in January 2008, otherwise you will wait an extra 12 months. You must press your accountant to complete the forms by the beginning of March so get your practice manager on the case now.
Interim payments for 2005/6 should be more accurate as a second-year effect, so any balancing payment is likely to be lower. But do not forget that they must also include a 14 per cent employer contribution. Make sure you have sufficient cash-flow to cover March payments. If these are made from the practice account, be careful to distinguish between partnership and non-partnership NHS earnings.
The latter must be paid individually, including the 14 per cent employer's contribution. You should also reconcile the lower payments made by younger partners affected by the current NHS contributions cap. This can be done via a distribution to them or a drawings restriction to those paying more.
If you are an employed GP this is a useful time to check all of your 2006/7 payslips and ensure that they clearly show your 6 per cent employee and the 14 per cent employer's
superannuation deductions. Make a clear record of these every year.
Locum GPs should be linked to a host PCT for pension contributions. If you are a locum the comments above regarding superannuation certificates for 2005/6 also apply. Check that these were carefully recorded and that your PCT has confirmed receipt. Do the same for your 2006/7 contributions. Make any queries to their pension officer urgently.
Finally we should all ask the NHS pensions agency for a copy of our contributions record and pension forecast at least every second year. Mistakes do occur and are better sorted out early rather than 25 years
later, near to retirement, just when we hope
career stresses are behind us!
John Couch is a GP in Ashford, Middlesex