Financial advice

Nigel Farrar is from Legal & Medical Investments Ltd and is a regular contributor to the NASGP magazine. His articles are designed to be informative but do not constitute financial advice. We recommend seeking specialist advice before making a decision.

Legal & Medical Investments Ltd is registered in England & Wales No. 3429678 Registered Office; Splatford Barton, Kennford, Exeter EX6 7XY Tel: 01392 832696.

We are authorised and regulated by the Financial Conduct Authority. Entered on the Financial Services Register under reference 185193.

The Financial Conduct Authority does not regulate offshore investments, tax advice, estate planning and some forms of mortgages. The tax reliefs referred to on our articles are those currently applying in the United Kingdom to UK Tax Residents. These tax reliefs are liable to change. The value of any tax relief available will depend upon the individual circumstances of the taxpayer.

clinical commissioning groupAs a freelance locum GP, the only way that you can pension CCG work under the NHS superannuation scheme is if you bite the bullet and become a salaried CCG employee. At retirement, you may get a separate Officer pension, or the CCG post may convert to Practitioner under what is known as the 'flexibilities'.

So why can't I pension my CCG work without becoming a CCG employee?

A GP (Dr X) who is solely a freelance GP locum cannot superannuate CCG work on locum forms A and B. This is because a freelance GP locum is defined under the NHSPS regs as follows....

"Locum practitioner" means a registered medical practitioner (other than a specialist trainee in general practice) whose name is included in a medical performers list and who is engaged, otherwise than in pursuance of a commercial arrangement with an agent, under a contract for services by:

  1. a GMS practice; 
  2. a PMS practice; 
  3. an APMS contractor; 
  4. an OOH provider; 
  5. or Local Health Board,

to deputise or assist temporarily in the provision of essential services, additional services, enhanced services, dispensing services, OOH services, commissioned services, certification services, Board and advisory work, health related functions exercised under section 75 of the 2006 Act, NHS 111 services or collaborative services (or any combination thereof)"

In particular, note that there is no scope for Dr X to superannuate CCG work if working directly for a CCG. Nor can Dr X superannuate their CCG work in any other way; i.e. as a type 2 (assistant) Practitioner.

A type 2 medical Practitioner is defined in the NHSPS regs as follows....

"type 2 medical practitioner" means a GP performer who

  1. is not a GP provider, and
    1. is employed (whether under a contract of service or for services) by a GMS practice, a PMS practice, an APMS contractor, an OOH provider, or a Local Health Board, and 
    2. in that employment is engaged wholly or mainly in assisting his employer in the discharge of the employer's duties as a GMS practice, a PMS practice, an APMS contractor, an OOH provider, or a Local Health Board; or 
  2. is participating in a Doctors' Retainer Scheme"

In summary, a type 2 is a salaried GP or long term fee based GP working for a GP Practice, an APMS contractor, an OOH provider, or a Local Health Board. By virtue that there is no reference to a CCG means that Dr X cannot superannuate their CCG income.

If Dr X has been an existing type 1 (GP Partners, single-handed GPs, and GP shareholders in GMS, PMS, sPMS, and APMS are regarded as type 1 medical Practitioners) or 2 (in addition to working as a GP locum) there would be no problem.

We find that Locums don’t seem to struggle to get a mortgage, unless they have only just commenced as self-employed and don’t have any accounts yet. We don’t find that lenders classify you as high risk, probably the opposite, and we don’t see a pattern of locums using a particular lender, so we would suggest that you discuss your options with an independent mortgage broker.

As with any one who is self-employed, when you apply, the lender normally sends us an accountants certificate for completion by your accountant. We basically confirm your last three years profits, your NI number and how long we have been acting for you. The lender also normally asks us to obtain Revenue forms SA302’s. These are Revenue tax calculations which are normally only issued when someone files a paper Tax Return. However, on request, the Revenue will issue these forms even when Tax Returns have been filed electronically.

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If you are a locum GP in the NHS scheme the practice must pay a 14.3% contribution to the locum, and you then pay that to NHS pensions along with your personal contribution.

If you are not in the NHS scheme, you can still negotiate an employer's contribution with the practice if that is your wish, although there is nothing contractual in place for non-NHS schemes.

This is one of the questions we get asked most at NASGP, since there's been a lot of conflicting advice over the years, not helped by some very strong opinions on social media. We've received exclusive clarification from the Technical Consultancy Team, NHS Business Services Authority (NHS Pensions).

View FAQ

If you are in receipt of a pension the rules are the same whether or not you had been a locum GP, salaried GP or partner. There is a 50% spouse's pension, and if you have a dependent child under 23 then they get 25% and if you have a child who has special needs and not capable of independent living then 23 does not apply.

And if you are not married you need to fill in form PN1 to nominate you partner to receive you pension benefits.

There's been a lot of conflicting talk recently about locums not being entitled to 'death in service' benefits, so we've been working closely with the NHS Superannuation people and Paul Gordon from MacArthur Gordon Ltd to come up with some pragmatic advice and steps that GP locums can take to fully compensate for this discrepancy. We hope that by looking at the following example, GP locums can then get advice as to how large their shortfall could be if the death in service benefit didn't apply to them so that they could then purchase the appropriate life insurance policy should they so wish.

As a locum GP, as long as you are, or have been a member of the NHS Pension Scheme, the NHS will provide some sort of protection in the event of death and ill health, but the amount will vary significantly depending upon your length of service, pensionable income and whether at the time of death you are considered an active member of the Scheme.

As such, reviewing your individual position is important but also difficult unless you know exactly when you plan to die.

Alternatives to the NHS pension's death-in-service benefit

If you'd rather not leave it to chance, you could always cover yourself with a life assurance policy. Either speak to your usual financial advisor, or get in touch with Claire Wilson claire.wilson@blackett-walker.co.uk from the Blackett Walker team.

The following are examples of likely benefits payable from the NHS in the event of death. In order to put figures to each of the examples we need to make the following assumptions. Dr is 33 and has been working in the NHS for 9 years, has Pensionable Pay of £70,000, is a member of the Old (or 1995) NHS Pension Scheme and currently has a Normal Retirement Age of 60. Rather than cover the complexities of dynamisation, we will assume that the average annual pensionable pay is £60,000.

Dr A is a GP Locum (or 'Locum Practitioner' in NHS pension terms) and is contracted to work Monday to Friday at the High St Practice. Unfortunately he dies midweek (i.e. death in service) on the Wednesday.

  • Death Gratuity: this would be equal to twice Dr A's uprated (dynamised) average annual pensionable pay.
  • Dependants Benefits: any (normal) widow's pension would be based on Dr A's hypothetical tier 2 (enhanced) ill health pension at date of death. (However for the first 6 months Mrs A would receive the initial widows pension based on Dr A's pensionable pay before the normal widow's pension took over).
  • In this case:
    • Dr A’s estate would receive £120,000 as a Death in Service Lump Sum.
    • The widow would also receive 6 months income of the pre death pensionable amount.
    • The Dependants Benefits would be calculated as follows:
    • 9 years service accrued.
    • Age 33 at death, leaving 27 years remaining to age 60 of which, the enhancement would be 2/3rds.
    • 9 + 18 = 27 years service.
    • His spouse would be entitled to 50% of the Enhanced Income for life, in this case the Enhanced Income would be calculated as follows:
      • 27 x £60,000 = £1,620,000 x 1.4% / 2 = £11,340 per annum.
    • Any child would receive a quarter each of the Enhanced Income until the age of 23 if in full time education, although this is capped at a maximum of 2 children at any one time.

Dr B is a GP Locum and is contracted to work Monday to Friday at the High St Practice. Unfortunately he dies on a Saturday; he does not work at weekends. In this instance the death within 12 months rules apply.

  • Death Gratuity: this would be equal to three times the value of Dr B's annual pension at date of death.
  • Dependants Benefits: any (normal) widow's pension would be paid on the first day after date of death and be based on Dr B's hypothetical tier 2 (enhanced) ill health pension at date of death.
  • In order to gauge likely Death Benefits we need to assume the likely accrued pension benefits.
    • As such, 9 years service within the Scheme in a sessional position post training will see accrued benefits of approximately £6,000 per annum (from 60).
    • The Lump sum payable would therefore be 3 x £6,000 = £18,000.
    • The dependants benefits would again be enhanced, so assuming death aged 33, with 27 years potential service remaining, an additional 18 years would be added to the accrued service, giving a total of 27 years as previously mentioned for Dr A.

Dr C is a GP Locum. Unfortunately he dies more than 12 months after his last pensionable post ceased. In this instance the death on preservation rules apply.

  • Death Gratuity; this would be equal to three times the value of Dr C's annual preserved pension.
  • Dependants Benefits; any (normal) widow's pension would be paid on the first day after date of death and be based on Dr C's accrued pension; i.e. no enhancement.
  • As with the previous example, the lump sum would be £18,000. The dependants benefits would be significantly less and based purely on the 9 years service.

As you can see, the above examples highlight the issues that could arise depending upon literally the date of death. It is therefore important that your individual situation is reviewed to ensure debts and liabilities are covered, your spouse can maintain their standard of living and your children can continue with their education or childcare.

Even as a GP locum there are some simple and affordable steps you can take to reduce the risk of losing out financially if you can't work through illness.

Your ability to receive income whilst off work through ill health whilst working as a GP locum very much depends on your employment status i.e. whether you're an employee, self-employed or 'worker'.

Remember that your legal employment status is something that is not necessarily determined by you, and is different to your tax employment status and your NHS pension employment status.

This FAQ is from the perspective of being a GP locum in the same practice for a 'long time', rather than about choosing working as a GP locum as part of your career portfolio.

It explains it from four different perspectives - NHS pension scheme, HMRC tax perspective, employment law and 'mission creep', and there's even an audio podcast too.

View FAQ

I work for a locum agency

I'm self-employed

  • If you're locuming in different practices using your own Terms and Conditions, managing your own bookings and determining the way within which you work, either manually or through platforms like LocumDeck, then your employment status is likely to fall within the self-employed status.
  • In which case, you don't qualify for SSP in that role.
  • But if you already have a Locum Insurance Policy, then this could cover you for up to £3,000 a week or 75% of your earnings for a year if you’re ill or injured and can’t work.

I work for an online locum platform

What about Permanent Health Insurance and Critical Illness Cover?

These are policies for much longer long-term benefits. Read this for more information:

Should locum and salaried GPs get income insurance?