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Locum GP? Watch out for the new pension trap

james gransby crop

GP locums taking a work break of over three months in any tax year could be caught by new rules that will increase the cost of their pension contributions.

The rules were introduced on the 2017 Locum B form, which is used to pay over monthly pension contributions to the NHS pensions agency. They affect GP locums who are members of the 2015 pension scheme.

All GPs who have qualified in the past five years will therefore be automatically affected, as will any GP locum meeting these criteria:

  • already a pension scheme member on 1 April 2012 with a birthday falling on or after 1 October 1965
  • joined the pension scheme since 1 April 2012
  • re-joined the pension scheme since 1 April 2012 after a break of more than 5 years.

How do the rules work?

If a GP has a work break of greater than three months and then works a session, his or her income will be annualised in order to calculate which tiered percentage rate applies to their employee pension contributions. This may hike the contribution they need to pay considerably.

Below are the tiered rates for pensionable income levels, effective from 1 April 2017

 Total pensionable income Contribution rate

 Up to £15,431.99


£15,432.00 to £21,477.99


£21,478.00 to £26,823.99


£26,824.00 to £47,845.99


£47,846.00 to £70,630.99


£70,631.00 to £111,376.99


£111,377.00 and over











How much impact will this have?

This is nicely highlighted by the example given in the Locum B pension form. Dr C is a GP locum who is a member of the 2015 NHS pension scheme. He performed irregular pensionable GP locum work during 2017/18 where there were breaks exceeding three months. He worked a total of 60 days and earned £30,000.

Dr C’s contribution rate is based on his annualised (not actual) GP locum pensionable income in 2017/18, calculated as follows:

£30,000 divided by 60 days multiplied by 365 days = annualised pay of £182,500, meaning the tiered rate of 14.5% applies.

Dr C pays £4,350 (£30,000 x 14.5%) in tiered contributions, instead of £2,790 (£30,000 x 9.3%).

What if I combine locum and salaried work?

GPs combining a salaried role and locum GP work could easily be affected by this too, if the locum work is irregular and includes a three-month break. This is because the salaried role does not count towards the continuation of work, as demonstrated by the following example.

Dr E, a 2015 pensions scheme member, was a part-time (three days a week) salaried GP during 2017/18. Although her salaried GP post was part-time it was continuous throughout 2017/18 and her salary was £40,000. She also performed irregular GP locum work in 2017/18 over 40 days and earned £25,000.

Because Dr E had breaks in her GP locum work exceeding three months her pay of £25,000 must be annualised.

£25,000 divided by 40 days multiplied by 365 days = annualised pay of £228,125.

Annualised GP locum pensionable pay of £228,125 + actual salaried GP pensionable pay of £40,000 = £268,125, meaning a tiered rate of 14.5%.

Dr E pays 14.5% tiered employee contributions on both her salaried GP pay of £40,000 and her GP locum pay of £25,000.

Dr E’s salaried role also had the higher tiered rate applied because of the break in locum work. This would equate to an extra 2% of pension contributions on the total income as the tiered rate would otherwise have been 12.5%. This would cost Dr E an extra £1,300.

Salaried GPs who only do very rare locum work, for example because they have a steady employed position but help out another local practice now and again, could be particularly badly affected.

For example, if a GP locum worked for 40 days at £600 per day at the start of the year, totalling £24,000, and then stopped working for the rest of the year the tiered rate would be 7.1%. This would give a total employee superannuation figure of £1,704 for the year.

By doing just one session later in the year after a three month break the figures would be based on a 14.5% tiered rate costing an extra £1,776 in employee superannuation contributions. This would therefore have been a very costly session to have undertaken.

Note that the employer superannuation figure payable in all examples would be 14.38% throughout since this is not tiered.

What can locum GPs do?

To prevent their pay being annualised and a higher employee pension contribution rate being applied, affected GP locums should plan ahead and avoid a break in their locum work of three months or longer from now on. It would be good practice to keep a diary log of sessions performed to check against the three-month break rule. An extra session at the wrong time could end up costing you more than the amount earned.

James Gransby is a partner at MHA MacIntyre Hudson, Maidstone, and is a member of the Executive Committee of the Association of Independent Specialist Medical Accountants