Sharp rise in employer pension contributions could deepen GP workforce crisis

A sharp rise in employer pension contributions from April threatens to exacerbate the workforce crisis facing general practice, specialist accountants have warned.

NHS pension concerns (Photo: iStock.com/stocknshares)
NHS pension concerns (Photo: iStock.com/stocknshares)

The government has confirmed that the employer contribution rate under the NHS pension scheme will rise from 14.38% to 20.68% from April.

But specialist medical accountants warned that the move threatens to exacerbate one of the most significant factors currently undermining the GP workforce - because it could leave more doctors facing heavy tax charges for breaching the annual allowance limit on pensions.

Deborah Wood, vice chair of the Association of Specialist Medical Accountants, said: 'The tax impact on individual GPs, who are deemed to pay their own employer contribution for tax purposes, needs to be understood.

Annual allowance

'If HMRC takes into account the additional 6.3% when determining exposure to the pension annual allowance and subsequent tax charges, then even more GPs could find themselves affected by annual allowance tax charges on a regular basis.'

GPonline reported last week on a warning from the GPC that even doctors in their 30s were being advised by accountants to reduce their working hours to avoid hitting the annual allowance limit.

GPC chair Dr Richard Vautrey said: 'GPs are being advised by accountants that if they are working nine sessions they may well find themselves liable to tax charges relating to the annual allowance - and the way to avoid this is to reduce the sessions they do.

'People often think of this as an issue for doctors aged over 50, but doctors in their 30s are being advised to reduce sessions as well. That is one of the reasons we are seeing the full-time equivalent GP workforce falling year on year.'

Early retirement

In January, GPonline reported that numbers of GPs taking early retirement had tripled over the past decade as the tax limits on pensions took their toll - adding to existing factors driving GPs out of the profession, including heavy workload and increasing bureaucracy.

The GPC has warned that the problem will 'get worse' unless the government overhauls rules on the annual allowance.

As part of the five-year GP contract agreement published earlier this year, in a move described by GP leaders as 'unprecedented', the BMA and NHS England called jointly on the government to offer NHS pension scheme members a 'partial pension' option.

This mechanism could in future offer high earning members of the NHS pension scheme the option of halving the rate at which their pensions build up by halving their contributions - meaning they could work more hours in the NHS without hitting the annual allowance limit.

BMA GP committee workforce lead Dr Krishna Kasaraneni said: 'Amid a growing GP recruitment and retention crisis that has been exacerbated by current pensions issues such as allowances and annualisation, we need to ensure that any changes to pensions going forward have a positive impact on the profession.'

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register

Already registered?

Sign in

Just published

GP Job of the Week: Lead GP, urgent care centre, east London

GP Job of the Week: Lead GP, urgent care centre, east London

Greenbrook Healthcare is looking to appoint a lead GP to its clinical leadership...

NHS England says it will avoid top-down approach to PCNs

NHS England says it will avoid top-down approach to PCNs

NHS England will not issue national guidance to primary care networks (PCNs) about...

Capita admits to further cervical screening administration errors

Capita admits to further cervical screening administration errors

The BMA has again demanded that Capita be stripped of its contract to provide GP...

GPC Wales appoints new chair

GPC Wales appoints new chair

Dr Phil White has been appointed the new chair of GPC Wales.

Nine in 10 GPs say appraisal improves patient care

Nine in 10 GPs say appraisal improves patient care

The vast majority of GPs believe annual appraisal helps to improve patient care and...

GPs have a key role to play in helping people back into work

GPs have a key role to play in helping people back into work

Brief interventions by health professionals can help people to achieve their working...