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Locum GPs may still face ‘unfair’ pension rules despite new proposals

Locum GPs may still be subject to ‘unfair’ pension rules despite the Government’s overhaul of the NHS Pension Scheme, experts have warned.

This week the Department for Health and Social Care (DHSC) announced proposals to reform NHS Pensions and allow greater flexibility on contributions and a review by the Treasury into the tapered annual allowance.

But it is unclear how, and if, these proposals will affect automatic annualisation for locum GPs and will allow them to choose their own pensions contributions.

Under new rules, due to the ‘annualisation’ of locums’ pay, locums will almost certainy have to pay 14.5% in contributions (see box, below).  

Previously, locums were allowed to stop working for up to three months before they were subject to annualisation. But in March this year the Government announced it would be removing the three-month rule to bring it in line with salaried GPs.

The BMA warned the change, introduced in April 2019, would discriminate against GP locums, particularly those with legally protected characteristics (ethnic minorities, women, those with disabilities) who are less likely to be in the scheme for a full year.

When asked by Pulse whether the new pension proposal would address locum annualisation the DHSC said the consultation would ‘focus on pension flexibility rather than GP locum pension contribution rules’ which was a ‘separate issue’.

Dr Ben Molyneux, BMA sessional GP Committee chair, said the flexibilities would only offer short-term relief for locums because the proposals did not address wider issues with the pension scheme.

He said: ’For locums, the biggest problem lies in annualisation, whereby some GPs are forced to make contributions based on annualised earnings, rather than actual income for hours worked. This creates the incredibly unfair situation where some locums are paying higher contribution rates for no additional pension benefit and we will continue to push for change in this area.’

Andrew Pow, board member of the Association of Independent Specialist Medical Accountants, said: ‘All the Government has said so far is that they are going to scrap the consultation they set out two months ago and issue consultation number two. There is a complete lack of detail. I don’t know what they are going to be looking at.’

Dr Richard Fieldhouse, chair of the National Association of Sessional GPs, shared his frustration and said he was unclear how the consultation would impact sessional GPs.

‘We get the roughest, rawest deal already. Annualisation is automatic if we take a day off. It literally could not get any worse.’

The new consultation, which falls under the NHS Long Term Plan, is expected to be published in the next few weeks. 

Example: How does annualisation work?

  • A locum provides holiday cover for a local practice.They work four days a week through the school holidays, each day being paid £500.
  • Their actual annual income is £26,000. However, to estimate how what percentage of their salary a locum has to contribute to pensions, the new rules only consider the days the GP actually worked and ‘annualise’ that. Ie, they are considered to earn £500 every day of the year. 
  • Their annualised income is £182,500. As a result of their higher projected earnings, instead of paying 7.1% of their income into the NHS Pension scheme, they will pay a higher rate of 14.5%, which amounts to £3,770 instead of £1,846.

(Based on examples given by Dr Nicola Hambridge, Leeds LMC chair, at the 2019 LMCs Conference in Belfast)