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GPs will not have to pay for rising employer pension contributions

GP partners will not have to bear any extra costs associated with the increase in the employer pension contributions, NHS England has said.

The announcement comes as part of the new five-year GP contract, published today, which guaranteed that any increases in employer superannuation contributions will be ‘fully funded’.

In December, the Department of Health and Social Care suggested to increase the employer contribution rate from 14.3% to 20.6% from April 2019, as part of proposals to change NHS pension scheme regulations.

This means the average GP practice would have had to pay around £50,000 a year to cover the rate rise for all their staff. 

However, the new GP contract has now said: ‘Rises in employer superannuation contributions will be fully funded.’

‘The Government [is] committed to provide additional funding for the full costs arising from this actuarial revaluation for the NHS in England. General Practice will not have to bear any additional costs,’ it added.

In June, Prime Minister Theresa May announced the Government will be providing an additional £1.25bn per year from 2019/20 to 2023/24, alongside the £20.4bn for the NHS, to ‘cover a specific pensions pressure’. 

Although the BMA could not confirm whether this funding relates to the increased employer contributions, it did clarify that the additional money to cover the employer contributions will not come out of the global sum.

Another announcements in the GP contract is that the BMA and NHS England will put forward ‘joint proposals’ to the Government to address the issues GPs face with their annual pensions allowance.

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 health and social care secretary Matt Hancock told Pulse earlier this month that he is currently in discussions with Treasury to change the tax treatment of pensions to boost GP retention levels

The recent GP partnership review found tax charges are a common factor for GPs deciding to reduce their clinical commitment, retire early or opt-out of the NHS Pension scheme.

Find all the headlines from the 2019/20 GP contract here…