Practices may have to pay for hikes in pension contributions from 2020

Practices may be required to pay for increased employer contributions from 2020/21, but will not have to cover the costs from April 2019, when the increases are introduced.
 
The Government is implementing a new employer pension contribution rate of 20.6%, in addition to a 0.08% administration charge, from April 2019 – which represents an increase of 6.3 percentage points increase from the current tax year.
 
Under transitional arrangemements, practices will not have to foot the bill for 2019/20, with NHS England and the Department of Health and Social Care paying for the increase in employer contributions.
 
However, the consultations response says that the scheme will ‘return to business as usual’ in 2020/21.
 
Accountants have said that it may be there will be extra funding to cover these costs in 2020/21.
 
In its response to a consultation on the changes, the Government said: ‘A transitional approach for 2019/20 has been agreed with NHS England and the scheme administrator, the NHS Business Services Authority.
 
‘In 2019/20 an employer rate of 20.6% (20.68% inclusive of the administration charge) will apply from 1 April 2019.
 
‘However, the NHS Business Service Authority will only collect 14.38% from employers. Central payments will be made by NHS England and the Department of Health and Social Care for their respective proportions of the outstanding 6.3%.’
 
It later added: ‘Arrangements for 2020/21 will be confirmed in due course, with the expectation that the scheme will return to “business as usual” arrangements in 2020/21 both in terms of contribution collections and funding flows.’
 
The vice chair of the Association of Independent Specialist Medical Accountants, Deborah Wood, said this meant there would be ‘no immediate effect on GP practices’.
 
She said: ‘For 2019/20 a transitional approach is being applied so that 6.3% will be paid directly by NHS England to the pension scheme.
 
‘Therefore, from a cashflow point of view there will be no immediate effect on GP practices. In 2020/21 GP practices will pay the full 20.68% but should have received funding to cover the extra cost.’
 
This story was first published on our sister publication Pulse.