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The waiting game

GP practices face annual pension contribution rise of around £50,000

GP partners may have to pay around £7,000 more per doctor each year for employer contributions to the NHS pension scheme, it has been revealed.

The Department of Health and Social Care is proposing introducing a new contribution rate of 20.6% - up from the current 14.38% - from next April as part of a consultation on proposals to change NHS pension scheme regulations.

The consultation, published yesterday, says it is proposing to introduce a new contribution rate of 20.6% for employers from 1 April 2019, although the document says the Government has committed to providing additional funding to meet costs arising from the proposed pension changes.

It also wants to:

  • renew current member contribution rates so that the same rates continue to apply beyond 31 March 2019;
  • provide civil partners and same sex spouses with the same survivor pension rights as widows;
  • extend the current forfeiture of pension benefits rules.

Andrew Pow, director of the Association of Independent Specialist Medical Accountants, said: ‘The current rate for employer contributions is 14.38%. An increase to 20.6% will represent an additional £4,665 for GP partners with pensionable earnings of £75,000, £6,220 for those earning £100,000 and an additional £7,775 for GPs with pensionable earnings of £125,000, as well as increased costs in employing staff.

‘This will have a severe impact on practice finances unless additional funding is available. To make it even worse, individual higher earning GPs in the 2015 pension scheme could also see an increase in their annual allowance tax charge.’

For an average GP practice with 8,500 patients, it could mean a rise of around £50,000 per year to cover the rate rise for all doctors and staff there.

Speaking of the proposal to increase the contribution rate to 20.6%, Mr Pow told Pulse: ‘I don’t think this proposal will be received very well by the profession. The impact is that GP practices have to pay the employer’s pension contribution for all their staff so, firstly, that will push the cost up of employing staff significantly.

‘Secondly, they then personally, if they are GP partners, have to pay the employer’s pension contributions on the profits that they earn so their personal pension contribution that they are paying is going to go up.

‘Unless the Government match it by funding at the top end, then it’s going to cause problems. We are talking about a huge sum of money – about 6% contributions over the whole NHS including hospitals.

‘There has to be some funding adjustment that will have to go in to counterbalance this.’

When Prime Minister Theresa May announced in June that the NHS would receive around £20.5bn extra investment by 2023/24, he said, there was an acknowledgement that there could be a pension issue and therefore a need to adjust for that with an extra £1.25bn top-up funding for pensions, but Mr Pow said that was unlikely to cover the full impact of this increased contribution rate rise.

‘There is a risk that that top-up will flow though hospitals and also through the GP side, but there will not be sufficient funding to cover all this unless the government does something more radical.’

A BMA spokesperson said: 'The BMA will be formally responding to this consultation in detail on behalf of all members affected. With regard to general practice, any rise in employer contributions must be fully funded to ensure GP partners are not unfairly impacted.'

The consultation closes on 28 January 2019. 

Readers' comments (26)

  • The final nail in the coffin?

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  • I put up the GMC fees as well, didn't make you all happy

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  • Oh how they must be laughing at the howls of protests..
    Their strategy is clear.
    Force UK GPs out by making life unbearable to create a "crisis".
    Sell off the primary care contracts to rich and powerful friends who set up corporate ownerships of several practices..eventually merging into 2-3 large players nationwide.
    Cartel is established.
    Employ underpaid unlimited numbers of Drs from poorer countries on temp visa and contracts to "solve the crisis". Low wages etc for all.
    Many in fact will be remote consulters via Babylon App services.
    Rural areas will be without any physical GP within 100 miles.
    Makes me sick.
    Should make everyone angry and want to fight back.
    But the BMA/RCGP etc will "discuss it with government".
    Because "one needs to be reasonable, doesn't one"
    God this country needs a revolution.
    Or an enema.

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  • David Banner

    I can’t believe they seriously want a 6.2% increase, practices will fold in their thousands. More likely this is a classic consultation ruse.......threaten us with a 6.2% rise, there is a hue and cry, then “negotiate“ it down to “only” a 3% rise........still outrageous, but you fool people into thinking they have scored a victory against you, when in fact you have rogered them.

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  • So this would offset any gains from indemnity. Would finish many remaining partners

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  • Dear Dr Banner,
    Its not a 6.2% increase, its a 6.2% rise. The percentage increase is 44%. 20.6 - 14.3 = 6.3. 6.3 as a fraction of 14.3 is 44%.
    They are proposing to hike the GP contract holders contributions by 44% (forty four percent).
    And of course Mat is the man who values GPs holding contracts in partnerships.
    Nigel really does now have a mountain to climb.
    Paul C

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  • The BMA is useless. They need to ensure that these costs are fully met by the governement. If not ,all members resign.If they had any leadership skills at all they could get enough GPs to resign to force the government to back down .
    In fact I think the GP partner contract is so bad that no one should be a partner. The government know this. This is why most young GPs are salaried, and are on a much lower income than they should be .Government has already won, thanks to the BMA.

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  • At age 45 I am already considering freezing my NHS pension due to current employers contribution taking me over annual allowance taper threshold. It is positive that earnings are at this level so probably wont get much sympathy though!
    This increase will make my decision for me.
    We are moving into the endgame now with any 'investment' into primary care clawed back and little incentive to work harder for diminishing returns. I will be dropping sessions as the stress of current workload not worth the money.
    When is the profession going to grow some and finally say enough is enough. My loyalty to the 'NHS' is severely stretched and would support a wholesale move to the private sector. The pension is no longer a good enough reason to remain aligned with the NHS.

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  • Before this change, for higher earning GP partners, it was pretty marginal with regards to the NHS pension being a good investment.

    For many, it will now be better to leave the NHS pension scheme and invest privately. That is particularly the case because:
    -If your partnership lets you keep your own employees and employers contributions (It really should!) then dropping out the scheme would increase your income by about 40% (albeit half goes on tax)
    -You are much more likely to be tapered (with regards to your annual allowance) and hence taxed on pension contributions (which defeats the point)

    The people most happy with this will be financial advisers who can plan for a very good Christmas next year.

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  • Agree with everything you said HAD ENOUGH. Another straw on the camels back. I’m curious to see when even the most idealistic Partner has got the message and is prepared for some serious industrial action.

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