Practices ‘should not pay “pension included” rates’

17th March 2022 by NASGP

Practices ‘should not pay “pension included” rates’

Practices that pay a rate inclusive of pension contributions ‘shouldn’t be doing so’, specialist medical accountants advised this week.

Liz Densley and Abi Newbury, directors at Honey Barrett Limited, advised in an exclusive article for NASGP: “There have been problems recently with practices quoting an ‘inclusive of employer contribution’ rate as the agreed rate that they will pay the locum. This is not correct.

“As an NHS Pension Scheme Employing Authority the practice has to allow the locum to be in the pension scheme and the employer contribution has to be on top of the agreed fee.”

They also clarified: “This is not to say that a practice has to pay all locums the same rate – they can pay differing hourly rates depending on the experience of the GP.

“For example, a recent former partner who knows all the systems and patients is likely to be more valuable and thus expensive than a brand new GP with no locum experience who may only be able to deal with half the patient numbers.

“However, the fee quoted must be the actual fee the locum will earn, and the employer contribution is on top of that.”

Abi Newbury is also a board member of the Association of Independent Specialist Medical Accountants.

Dr Richard Fieldhouse, NASGP chair, said: “We are very grateful for this formal clarification from this highly respected firm of specialist medical accountants.

“Although we can see why some practices may have made this mistake, we now advise locums to formally write to practices to set the record straight, confirming that all future employer’s contributions must be paid on top of any agreed rate, and for the practice to discuss with their accountants the best way to handle the tax implications of previous ‘pension-included’ fees.

It’s important to remind practices that the cost of their employer’s pension contributions is already accounted for through the global sum.

“This matter was first brought to our attention by several members who have recently, independently, submitted formal complaints to The Pensions Ombudsman regarding this matter, and we very much hope that by raising this issue, more practices will avoid having to face unplanned costs in the future.”

Read Liz and Abi’s advice in full.

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