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Gold, incentives and meh

'Urgent' pension overhaul needed to stop GP partners retiring early, says review

GP pension arrangements should be overhauled in a bid to stop GPs retiring early or reducing their sessions, the partnership review has said.

The pension system provides 'perverse incentives' for GPs to reduce clinical hours, retire early or opt-out of the NHS pension scheme, in order to avoid additional tax charges, according to a report by the review team, published today.

Dr Nigel Watson, independent chair of the government-commissioned review, said GPs need 'greater flexibility' in their pension scheme, such as being able to choose how much they pay into their pension pot, so they can avoid hitting their annual or lifetime allowances.

The report recommended: 'A review of the current pensions arrangements for GPs should be undertaken, with clear solutions proposed to address the current negative impact on partnerships.'

It added: 'Greater flexibility in pension contributions, in line with the flexibilities available to members of other public-sector pension schemes, would support some GPs to remain in practice for longer. The Government should urgently review current arrangements to determine what additional flexibilities could reduce the negative impact on retention of both partners and sessional GPs.'

In 2016, the amount GPs were allowed to save into their pension before incurring a tax charge was reduced, from £1.25m to £1m. This led to many GPs seeing little benefit in continuing to pay into their fund, and NHS England heard anecdotal evidence GPs retired early to avoid the new rules.

But just last week, health secretary Matt Hancock told Pulse he is in discussions with the Treasury over changing the tax treatment of pensions in a bid to boost retention.

The partnership review's report, published today, said the current NHS pension arrangements mean it is often against GPs’ financial interests to keep working, due to tax implications.

It said: ‘These perverse incentives for experienced GPs to reduce sessions, in order to reduce their exposure to additional tax charges, represent poor value for the system given the high cost of training GPs and the increased cost of locum cover to backfill capacity gaps.'

This is not only a problem for older GPs, as the changes are leading to ‘significant personal financial impact, even for those relatively early in their career’, the report said.

Speaking to Pulse, Dr Watson said while NHS pensions were still superior to most private pensions, GPs were starting to see them in a ‘negative light’.

He said: ‘The annual allowance means that if the consumer price index (CPI) is 3.5% - which it was last year - you don’t have to put very much into your pension before you reach the annual allowance in growth in your pension pot so you are then subject to tax.

‘In terms of the lifetime allowance, GPs are hitting that earlier in their career, in their mid to late 40s.’

Dr Watson said: ‘So we’ve heard some younger GPs’ negative comments about pensions, and heard some older GPs are opting out of the pensions scheme  - or just taking early retirement because its not worth the hassle - and we’ve heard people are cutting their sessions down.’

To overcome this issue, Dr Watson said there should be 'greater flexibility in terms of how much [GPs] put into their pension pot'.

Meanwhile, the partnership review also called for on the ongoing problems with Capita’s management of pensions to be 'urgently resolved'.

Last year, the BMA said it would support practices in taking legal action against Capita, saying the issues, relating to patient record transfers and processing payments, were ‘unacceptable’ and had gone from ‘bad to worse’.

 

Key recommendations from the report

1. There are significant opportunities that should be taken forward to reduce the personal risk and unlimited liability currently associated with GP partnerships.

2. The number of general practitioners who work in practices, and in roles that support the delivery of direct patient care, should be increased and funded.

3. The capacity and range of healthcare professionals available to support patients in the community should be increased, through services embedded in partnership with general practice.

4. Medical training should be refocused to increase the time spent in general practice, to develop a better understanding of the strengths and opportunities of primary care partnerships and how they fit into the wider health system.

5. Primary Care Networks (PCNs) should be established and should operate in a way that makes constituent practices more sustainable and enables partners to address workload and safe working capacity, while continuing to support continuity of high quality, personalised, holistic care.

6. General practice must have a strong, consistent and fully representative voice at system level.

7. There are opportunities that should be taken to enable practices to use resources more efficiently by ensuring access to both essential IT equipment and innovative digital services.

 

Source: GP Partnership Review

Readers' comments (14)

  • I came out of the scheme in 2014. At that point I realized what a lot of extra tax the pension actually is as we pay employers and employees conts.

    Suspect the real reason they want something done is to shore up the pension fund. By coming out we no longer pay vast sums in and this will start to have an effect on pension values.

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  • I have stopped the pension due to tax and being unable to afford it. I do not trust the government with it as well.Better in my bank than the government's.

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  • I retired in summer 2018, at 55yr, with an actuarial reduction of 22%,taking the financial hit on my theoretical pension if I had managed to continue until 60+ was the best decision I have ever made, I would much rather cut my cloth accordingly and enjoy everyday of the rest of my life than continuing to expose myself to the torment of remaining a GP in the NHS.
    If this is a possibility for you please consider it whilst the opportunity remains.

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  • There is an obvious solution. When MPs were in a similar situation they voted themselves a taxpayer funded injection of cash to top their scheme up - seems good to me.

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