Superannuation and Seniority Payments
The details for these two NHS payments can be checked via NHS web sites. However, PMgr needs to have some understanding of the payment methods and amounts, as GPs normally will ask general queries about quarterly payments received. PMgr has to highlight any shortfall in payments immediately so that the shortfall can be rectified by PCT.
Under the new GMS contract, GP’s superannuation contributions will be calculated on actual NHS profits. This is a major change to the scheme, which will affect both GMS and PMS GP’s.
Profit is total income less total expenses. For the first time a practice’s expenses will now have an impact on superannuation. It will be more important for practices to ensure expenses are controlled.
Increase in Employee Superannuation Contributions
The ‘employee’ contribution, presently 6%, changes to: (check recent amounts Jan 2017)
NHS Earnings %
Up to £19,165 5
£19,166 to £63,416 6.5
£63,417 to £99,999 7.5
Above £100,000 8.5
Most GPs are therefore seeing an increase in employee contribution of between 1.5% and 2.5% when calculated on their NHS earnings, without any increase in any NHS benefits.
Added Years –
Enabling GPs to purchase up to £5,000 in additional pension.
Based on the increase in the retail price index plus 1.5%.
Extra Lump Sum
On retirement GPs presently receive a tax-free lump sum equivalent to three times their annual pension. It would be possible to commute an additional part of the pension in exchange for an increased lump sum, up to certain limits.
GPs who retire before age 60 suffer an abatement of their pension if their total earnings, including their pension, are more post retirement than they were before.
Currently the PCO are making deductions for superannuation. It must be stressed that this is only a payment on account based on an estimate of your profits. Once the actual profits have been calculated one may have an increase contribution to pay or receive a refund on superannuation.
Practices need to ensure that provisions are made for payment of the balance of superannuation. It would be advisable when practices receive achievement payments for the QOF they put aside the amounts due for superannuation.
Seniority payments are payments to a contractor in respect of an individual GP provider (a partner, single-handed practitioner or a shareholder in a limited company that is a GMS contractor). The payments reward experience and are based on the GP’s number of years of reckonable service.
Calculating your seniority payments
Any GP provider who has at least two years of service as a GP provider will be eligible for seniority payments.
There are four stages in calculating the seniority payment to which one is entitled.
Stage one – calculating reckonable service
Stage two – seniority and qualifying dates
Stage three – calculating the full annual rate of seniority payments
Stage Four – Average Adjusted Superannuable Income
Seniority factor payments were introduced as part of the new General Medical Services (nGMS) contract in 2004 and were designed to reward GPs’ experience.
They are part of an individual GP’s pay although they are paid to the practice. The payment that a GP receives is based on a scale and is dependent on:
* A GP’s years’ of reckonable service
* A GP’s ‘qualifying income fraction’ – this determines the proportion of the seniority payment that a GP receives and is a fraction of their NHS profits (excluding any seniority payment) compared to the national superannuable income.
GPs earning less than a third of the national superannuable income are not eligible for seniority payments. GPs earning between one third and two thirds of the national superannuable income receive 60 per cent of the payment. GPs earning two thirds or more of the national superannuable income receive 100 per cent of the payment.
The final seniority factor for a given year can only be calculated once the average superannuable income for all GPs is known. As it often takes a long period of time for this data to become available, an interim seniority factor is calculated which enables primary care organisations to make payments before they have the data to calculate the final seniority factor.
The Technical Steering Committee, that has representatives from the General Practitioners Committee (GPC), NHS Employers and the Health Departments for England and Wales, publishes the interim and final seniority factors for General Medical Service (GMS) contractors. For more information visit the Health and Social Care Information Centre (HSCIC) website.
2014/15 phasing out of seniority payments
It has been agreed that seniority payments will cease on 31 March 2020. In the meantime, those in receipt of payments on 31 March 2014 will continue to receive payments and progress as currently set out in the SFE (Statement for Financial Entitlement – in the past before 2004 Red Book). There will be no new entrants to the scheme from 1 April 2014. The current qualifying arrangements will continue for those currently in receipt of payments.
It is the joint expectation that the agreed changes to seniority payments will result in the quantum of seniority payments from the seniority pool falling by 15% each year from 2014/15 to 2019/20. In the event that this reduction is not delivered in any year, NHS Employers and GPC will agree action to achieve this. All funding released will be added into the global sum with no Out of Hours deduction being applied.
2014/15 interim factors
The 2014/15 interim seniority factors are £96,097 in England, £84,012 in Wales and £87,707 in Northern Ireland and will be used by NHS payment agencies to determine the level of the seniority payments for 2013/14. More information can be found on the HSCIC website (http://www.hscic.gov.uk/)
12.3 CCGs and the changes:
It is important to establish the correct employment status for a worker from the outset. Wrongly identifying a worker as self-employed when in fact they should have been treated as employed can leave the engager facing large tax and NI liabilities. Therefore, the employment status of individuals engaged for CCG posts should be carefully considered to ensure it is correct under current legislation.
Where a GP’s role in the CCG is classed as employment rather than self-employment, there are a number of areas, which need clarification:
- TAX RELIEF ON EXPENSES INCURRED
- NATIONAL INSURANCE CONTRIBUTIONS
From April 2013, all CCG earnings for GPs carrying out work for a CCG will be fully superannuable, providing that the CCG is an NHS employing authority under the terms of the NHS pensions regulations.
Under current seniority calculation rules there will be an effect on the amount of seniority that a GP is entitled to when working under an employed rather than a self employed arrangement and this needs to be fully understood.