This site is intended for health professionals only

At the heart of general practice since 1960

Read the latest issue online

Gold, incentives and meh

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)

  • I thought the GP Pension Scheme was effectively in profit. Anybody know if this is not the case?

    Unsuitable or offensive? Report this comment

  • All GP employer contributions are paid by NHS to GP accounts and forwarded from there to NHS pensions. The issue is that now more will breach AA thresholds.

    Of course if NHS stops paying the Employer contribution it will be in breach of contract. Question is what will BMA do (their bread and butter)?

    Unsuitable or offensive? Report this comment

  • Roderick Shaw,suggest you Google 'Ponzi scheme'.

    Unsuitable or offensive? Report this comment

  • The narrow consultation period seems to suggest its a done deal with token consultation. 
    Impact for general practice would be devastating. Even if there are increases to GMS funding to account for this, I doubt (as with previous experience in 2008  when contributions were increased and when GP practices took on responsibility for employers contributions I think in 2005) any uplift would fully compensate for the increase; as an example, recent GP earning figures show that the 3.3% uplift given last year only translated into a 0.4% increase in GP funding no doubt eaten into by expenses so in essence a paycut. This increase probably brings the NHS Pension scheme employer contribution rates on a par with the civil service and judiciary but their employee contributions are far lower that senior NHS staff. So maybe negotiating a reduction in employee contributions would be an option?
    For GP partners this is a double whammy, as we pay both employees and employers on our pensionable pay so this will amount to paying 35.6% into the scheme! I.e over 1/3 of income. That doesn't include additional tax from exceeding the tapered annual allowance which would make the cost even higher. 
    Being the cynical type, i would say the Government does not want an NHS pension scheme! Senior staff will probably stop contributions and as existing contributions are used for current pensions, the scheme could fall apart. I also don't think the NHS pension scheme is as "government backed " as we assume it is. BMA as usual will be impotent. 

    Unsuitable or offensive? Report this comment

  • GPs should become like actors. They are on the whole an extremely versatile bunch with multi-skills. Because they can't rely on their principal training to provide a reasonable income they often have very varied working portfolios. It is now hopeless to either rely on the GMS contract or on the NHS as a employer. It is all officially now OVER. So as I have said so many times before, upskill, diversify and regard medicine as a part -time hobby.

    Unsuitable or offensive? Report this comment

  • The ugly side of Tories as infighting spills over to plundering and ransacking vulnerable NHS trying to grab the last buck before they sucked down in their own dump.

    Unsuitable or offensive? Report this comment

View results 10 results per page20 results per page50 results per page

Have your say