Posted by Steve Tucker on December 20, 2018
On 18 December 2018, The Department of Health and Social Care announced proposals to increase, from April 2019, the NHS Pension Scheme employer contribution rate from 14.38% to 20.6%.
Despite an additional £1.25 billion of NHS funding, pledged by the Government in June 2018 to help meet rising pension costs, it is possible that GP partnerships will suffer a profit reduction as a result of the change.
The rise in employer’s contributions will affect both the practice profits and GP personal superannuation contributions. For a GP within the NHS scheme, the increase in their personal contributions will be as follows:
|Pensionable Earnings||Increase in employers’ contributions|
Despite the increased pension contributions creating additional tax relief, GP partners will still be paying out more money as a result of the increase. It remains to be seen if the Government will provide funding to negate this increase in outgoings, and incentivise GP’s to join or remain as partners.
The proposed changes will also impact practices that employ locum GP’s. Practices are liable for the employer contributions for any locum GPs, within the NHS Pension Scheme, contracted to work for the practice. The additional cost to the practice under the current proposal will be £559.80 for every £10,000 of locum costs.
Under the new consultation it is proposed that current employee contribution rates remain unchanged from April 2019.
There is a consultation period for this proposal which closes on 28 January 2019.
If you would like to know more about the proposed changes to NHS Pensions, please contact our GP and NHS Pensions expert Steve Tucker for more information.