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Practices to pay £23 pensions ‘admin fee’ per employee

CORRECTION: This article initially suggested that the Department of Health had calculated a £235 average fee per pension scheme member. The correct figure is actually £23. We apologise for this mistake and any confusion caused.

GP practices will have to pay an employer administration fee to the NHS pension scheme under new plans proposed by the Government to raise £35m a year.

The Department of Health’s consultation, launched today, said the levy – estimated to be an average of £23 per member – would pay for the administrative work relating to handling of pension contributions on behalf of employers.

It will apply to all types of NHS employers ranging from GP practices to large hospital trusts, but the GPC told Pulse it is pushing for the expense to be reimbursed as part of contract negotiations.

The DH proposes that instead of a flat fee, which would unfairly disadvantage smaller employers such as GP practices, the rate should be a percentage of each employee member’s pensionable earnings.

The document says the final figure will be set by health secretary Jeremy Hunt but suggests 0.08% as an example that would raise the required amount over the course of the next two years.

The DH says the easiest way to collect the levy would be to add it to the monthly standard employer contribution.

’For instance the current rate of 14.3% would be increased marginally to 14.38% to collect a levy of 0.08%,’ the consultation document says.

Under the plans, proposed to come in from April next year, each employer would include a record of the amount of scheme administration levy payable in respect of each member as part of its annual statement to NHS Business Services Authority.

Late payment would accrue interest and an added administration fee, the document further suggests.

On the size of the fee, the consultation said: ’The levy rate will be set by the Secretary of State for Health, as the responsible authority for the scheme, assisted by advice from the NHS Pension Board.’

But it added: ‘The Department and NHS Business Services Authority (NHS BSA) forecast that the levy would need to raise £35 million per year for the two year period 2017-18 to 2018-19. This translates into a levy rate of 0.08% of active member pensionable pay.

‘Spread across the scheme’s 1.5 million active members, the administration cost is an average of around £23 a year per active member.’

It said the rate ‘will be reviewed during 2018, together with the standard employer contribution as part of the scheme valuation process’, with a new levy rate to be set for the four year period 2019/20 to 2022/23.

Over time, the levy rate ‘is expected to reduce as one off costs such as Guaranteed Minimum Pension reconciliation pass through and the benefits from NHS BSA’s efficiency and digital projects come on stream’, the consultation added.

GPC deputy chair Dr Richard Vautrey said that ‘the number of staff members per practice will vary considerably based on their size and also not all practice staff members will be members of the pension scheme’.

He also said the DH’s average figure may not be representative for GP employees as it is an average across the whole pension scheme which ‘may not reflect the same workforce mix of a practice’.

He added: ‘We were aware of this consultation and, as we did with last year’s expenses uplift which included new costs such as this, we would insist that NHS England and DH factor this increase in to practice expenses calculations if it is implemented following the consultation.

‘Practices cannot afford any further cost pressures without them impacting on the services they provide or even the viability of the practices itself.’