What the pensions authority has done over the past few days is issued GPs with statements in respect of their 2013/14 pension growth, i.e. their annual allowance, telling them that these are their final statements they need to take action in respect of potential tax liabilities that result from them breaching the limits.
The points that arise out of that is that any tax payable in respect of the 2013/14 annual allowance isn’t payable finally until 31 January next year, so it is a bit early. If the GPs are breaching the limits and they have a tax liability they do have the option for the pension scheme to make the tax payment on their behalf but they don’t need to make an election for that until July 2015 so that’s quite a few months away. They are obviously using some form of estimates for the 2013/14 earnings and looking at the statements that we have received they appear to be highly inaccurate based upon previous years’ earnings.
The other point is that GPs’ 2013/14 earnings will not be certified until next February or March so how can they be issuing a final statement in respect of their pension growth. So it is really just causing a whole load of anxiety based upon figures that are incorrect or not even due to be with the pensions agency for several months yet. I have had probably about a dozen clients since yesterday sending through these, panicking like mad because they think they’ve got a tax liability.
As an example, if I was a GP and I asked for a pensions forecast today they haven’t got my 2014 earnings figures so what they will do is just assume a figure based on the previous year’s earnings, so they will put exactly the same figure in, which is not an unreasonable assumption to make.
Now I have actually had some of these statements through and to get the level of pension growth that they are forecasting for 2013/14, one of my GPs would have had to have a pay rise of £48,000 in the year.
Now clearly with what is going on in primary care, that is never going to happen and that makes me wonder where on earth they are getting their figures from for their 2013/14 estimated earnings. If you put in the correct figure, i.e. the same earnings as the previous year, then the actual GP doesn’t even breach the limit so he shouldn’t have had any notification whatsoever.
I haven’t got the faintest idea why they’re doing it but it is just another example of the level of disarray that NHS Pensions is in with the information that they send out to clients, which in our experience has a high degree of error in it. It is just another example of the way the pensions authority is dealing with the whole of the GP pensions scenario – it is an absolute farce in my view.
This is just completely causing a whole load of anxiety among GPs, which is just completely unnecessary. Therefore we have sent a note out to all of our clients saying that if you have received one of these statements, don’t worry because there is no tax payable immediately, we know that they are making huge mistakes on them, they can’t certify your earnings so basically there is nothing for you to do.
Keith Taylor is head of medical services as BW Medical Accountants
