The Government has confirmed NHS pensions reforms that experts say will see GP practices spared charges of up to ‘hundreds of thousands of pounds’.
The changes will mean if practice staff close to retirement receive a pay rise then their employing practice will not be hit with a fee, so long as the pay increase is to reflect the NHS’s Agenda for Change pay bandings.
Ordinarily a fee is applied to ‘safeguard the NHS Pension Scheme from the increased cost of paying pension benefits inflated by excessive late career pay rises’, said the Department of Health and Social Care (DHSC) in its plans.
As part of the reforms, the DHSC also confirmed that the £20,000 golden handshake for new GP partners, offered as part of an NHS England GP practice recruitment drive, will not have pension deductions taken from it.
The DHSC laid out the changes last week when it published its reforms to the NHS Pension Scheme regulations, following a consultation that ran between January and April this year.
Under the plans, new exemptions will be introduced to regulations in place since 2014, which see employers charged if their employees’ pensionable pay increases in the last three years before retirement above a defined limit.
In its consultation response published yesterday, the DHSC said that GP practices that benchmark employee pay ‘against a nationally agreed contract’, such as Agenda for Change pay bands, will now be exempt.
It said: ‘The department understands that this is a regular occurrence in primary care and does not wish to treat these employers differently if they choose to benchmark staff pay against a nationally agreed contract.
‘The department confirms that such increases will be covered by the amendment to exempt pay increases in line with certain nationally agreed contracts.’
However, practices who wish to claim this exemption must ‘evidence their continuing intention to pay in line with such terms’ to the NHS Business Services Authority to ‘ensure that the policy operates as intended’, it added.
Practices will also be exempt from pensions charges if non-GP partners’ – such as practice managers or nurses – pay increases because another partner leaves the practice or reduces their sessions, the document said.
These final pay control charges currently do not apply to GP partners, who are subject to different pension arrangements to non-GP partners.
AISMA executive board member and Mazars UK partner Andrew Pow told Pulse that the current charges are ‘totally out of control’.
Practices could be charged ‘anything from the tens of thousands to in some cases hundreds of thousands’, with charges seeing an ‘exponential rise’ over the last few years, he said.
He added: ‘We’ve seen quite a few people being caught by employees having larger pay rises in the last couple of years before retirement.
‘These were astronomical, they were completely disproportional charges.’
According to the original consultation, a 2019 review found that pay control charges were around £35,000 on average.
The document also confirmed that the £20,000 partnership bonus in the new GP contract will not be pensionable, effective retrospectively from its launch in April 2020.
It said that ‘payments and allowances’ under the New to Partnership Payments Scheme will be treated as non-pensionable earnings – ‘in line with current NHS Pension Scheme policy on non-regular payments, including bonuses’.
According to the DHSC, AISMA confirmed it agrees to the proposals in its consultation response.
Mr Pow told Pulse: ‘If it was pensionable, what would happen is new partners would get all this money and then have to pay tax, national insurance and pension contributions on it and that would diminish the value of it quite significantly.’
However, the consultation response document said that another respondent thought the changes were ‘less beneficial to scheme members nearer to retirement age’ and suggested that members should be able to decide whether the income should be pensionable.
Earlier this year, the £20,000 GP partnership bonus scheme was extended to include physician associates, bringing the number of eligible roles to 12.