Penalties of up to £250,000 can be imposed where practice staff or non-GP partners on final salary pensions under the 1995 section of the NHS pension scheme see their pay rise faster than a set limit in the final three years before they retire.
The limit for annual growth in pensionable pay is the consumer prices index (CPI) measure of inflation - currently around 2% - plus 4.5%. A rise beyond this limit triggers a 'final pay control charge' from the NHS Business Services Authority - which a GP practice or potentially an individual partner would have to pay immediately to avoid racking up further interest or administration fees.
Standard annual pay rises are unlikely to hit this threshold, but as practices look to expand their multidisciplinary teams staff are increasingly likely to take on more senior roles that could trigger larger increases in salary - and if these come within their final three years before retirement practices could face heavy fines.
Non-GP partners could also face spikes in income that trigger a penalty through no fault of their own - for example when another partner leaves and is not immediately replaced.
And accountants have warned that £20,000 golden hello payments for new partners offered through the 2020 GP contract deal could push more practices over the limit.
NHS England has said the £20,000 payments will be made initially as a loan and convert to a permanent payment after around five years. The payments are available to first-time GP partners or to ‘other professionals’ including nurses and pharmacists.
If a nurse or pharmacist in the 1995 pension scheme with about eight years to their planned retirement takes on a partnership role, however, a practice could face a six-figure penalty years down the line - because when the golden hello becomes a permanent payment it would push their pensionable pay over the annual increase cap.
Andy Pow, an Association of Independent Specialist Medical Accountants (Aisma) member and partner at Mazars UK, told GPonline: ‘All practices are at risk. As it stands, a normal contractual pay rise wouldn’t trigger it.
‘But someone taking on a changing or additional role could mean a larger pay rise. This is a risk with where the GP contract is going - there is a massive expansion of the primary care workforce, so practices have to be promoting people into more senior and management roles - and the natural outcome is more people having pay rises beyond these limits.’
He added: ‘If you are a practice that gets caught out, it can be a very significant financial penalty.’
James Gransby, an Aisma member and medical accountant at RSM Tax and Accounting Ltd wrote on Twitter that the heavy penalties could affect practices taking advantage of the £20,000 golden hello scheme 'unless the rules change'.
The GP contract agreement published earlier this month said 'detailed guidance' on the golden hello scheme would be 'published following ongoing engagement with the profession and wider stakeholders'.It added: 'The scheme is expected to evolve in the light of experience. Its initial phase is likely to run for two or three years.'