The pensions ombudsman has upheld a complaint against Capita and the NHS Business Services Authority (NHS BSA) for the ‘negligently’ handling the pensions contributions of a doctor who was later hit with a hefty tax bill.
‘Dr N’ faced a tax charge of almost £4,000 on his pension commencement lump sum after breaching his lifetime allowance (LTA), despite asking for clarifications from NHS BSA and Primary Care Services England (PCSE) – which is run by Capita.
He complained that the charge could have been ‘avoided, or significantly reduced, if NHS BSA and PCSE had acted on his requests to update his pensionable pay figures prior to his retirement’, according to the ombudsman.
The complaint was upheld earlier this month, with the ombudsman ruling that ‘NHS BSA negligently failed to provide Dr N with adequate information about the taxation of his benefits and PCSE negligently delayed the handling of his pension contributions’.
The ombudsman’s report said Dr N – who was a primary care doctor, but not necessarily a GP – had initially raised concerns that his pay was ‘significantly underestimated’ and that NHS BSA ‘had not been updated with his correct pay’ in 2016.
After being informed of an LTA charge of £3,839.46 in 2017, he raised a formal complaint with NHS BSA that was not upheld.
He also complained to PCSE but ‘did not receive a response’, the document said.
It added: ‘He had sought to ensure his records were up to date because it was foreseeable that things could go wrong.
‘PCSE and NHS BSA ought to have carried out his wishes by ensuring his earnings were up to date and there appears to be no reason why this could not have been done.’
Evidence submitted to the ombudsman ‘supports Dr N’s claim that he repeatedly asked for his pay information to be updated and that he chased this repeatedly’, it said.
PCSE acknowledged that ‘there was a delay’ in providing information to NHS BSA that ‘could have been avoided’, but said it ‘cannot be expected to be aware of the potential liabilities of individual GPs’, according to the ombudsman.
However, ombudsman Anthony Arter ruled that there was an ‘excessive delay’ to PCSE completing the ‘simple task of updating DR N’s salary’ and that this amounted to ‘maladministration’.
He added that although NHS BSA ‘had no duty to actively advise Dr N how to best access his pension’, the information it provided him was ‘incomplete and misleading’.
The bodies have now been instructed to repay Dr N £1,919.73 each towards the LTA charge, plus £250 each for the ‘significant distress and inconvenience caused’, within 28 days.
Experts warned that more cases would be needed to establish a firm precedent and urged GPs approaching retirement to ensure their pension details are up to date to avoid facing a shock tax bill.
GP pensions expert Nick Grundy said: ‘This illustrates the inability of PCSE/Capita to do their job properly.
‘[But] unfortunately, I think lots more cases are needed to get traction here – we need to demonstrate that this affects lots of people.’
Deborah Wood, chair of the Association of Independent Specialist Medical Accountants (AISMA), said: ‘This sort of issue occurs occasionally when incorrect or underestimated NHS pensionable earnings are used to calculate the pension award.
‘The advice for doctors approaching retirement is to ensure their pension information is as up to date as possible, and when providing estimates of pensionable pay use over-estimates rather than under-estimates.’
A spokesperson for Capita, which runs PCSE, said: ‘This issue occurred in the early phase of the PCSE contract and since then the GP pensions process has been transformed to make it more transparent and give GPs greater clarity about their pensions information.
‘The new GP payments and pensions system launched earlier this year and it enables GPs to view their pensions contributions for the last seven years and allows them to check that their records are up to date and submit any missing information.’
And an NHS BSA spokesperson said: ‘We’d like to thank the pensions ombudsman for their recent decision. In partnership with employers including PCSE, we’re committed to administering and updating the NHS pension records of our 3.4 million members accurately and efficiently and we’d like to apologise for the inconvenience caused in this case.
‘There have been improvements made to the management of GP pensions since 2016/17 when this case occurred and we continue to work with our partners to make further improvements as required, in particular where pensions are affected by lifetime allowance.’
The portal has been plagued with issues since it launched in June and that BMA has warned that practices must not be left to correct errors in it and that GPs must be compensated for any time and money spent putting things right.
In 2018 consultancy firm PwC was appointed to help review all GP pension data, which NHS England said would have a ‘significant’ impact on a ‘large proportion of the GP community’.
But at the start of last year, it was revealed only one in four GP pension records for 2017/18 were up to date.
Maximise your practice's financial potential and compare your performance with peers with Pulse Intelligence. Register for a 30 day free trial.