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

Follow Us:

Just published

Surgeries risk losing £40,000 of funding for half-day closure

Surgeries risk losing £40,000 of funding for half-day closure

GP surgeries risk losing more than £40,000 in funding if they close during core hours,...

GPs slam 'fantasy' claim that half-day closure ban could create 287,000 appointments

GPs slam 'fantasy' claim that half-day closure ban could create 287,000 appointments

GP leaders have hit out at 'fantasy' claims from NHS England that ending half-day...

GPs urged to promote MMR catch-up as UK loses 'measles-free' status

GPs urged to promote MMR catch-up as UK loses 'measles-free' status

NHS England has urged GPs to promote catch-up vaccination programmes for MMR after...

'No way back' for practices that join integrated care provider, warns BMA

'No way back' for practices that join integrated care provider, warns BMA

Practices that 'suspend' their contract to join an integrated care provider (ICP)...

GP at Hand should only be allowed to provide NHS 111 services, says BMA

GP at Hand should only be allowed to provide NHS 111 services, says BMA

Babylon GP at Hand should no longer be allowed to register patients and instead be...

A financial guide for GP locums

A financial guide for GP locums

Medical accountant Jenny Stone provides a guide to pensions, setting your fees and...