GP pension contribution thresholds to be uplifted from next month

The earnings thresholds for GP pension contributions will be uplifted from next month, the Department of Health and Social Care (DHSC) has announced.

Following a consultation that ran from 19 July to 12 August, the DHSC confirmed it will raise member contribution tier thresholds in line with the Agenda for Change pay award for England announced in July.

The thresholds determine a pension scheme member’s contributions rate according to their pensionable earnings.

The changes will come into force on 1 October following changes to the NHS pension scheme regulations in Parliament, the DHSC said.

Under the changes, the DHSC will:

• Uplift the pensionable earnings thresholds in the member contribution structure, in line with the AfC pay award for England
• Correct an ‘omission’ in relation to pension scheme eligibility so that pensioners who receive a tier 2 ill-health pension will be able to join the 2015 pension scheme if they returned to NHS employment from 1 April 2021

The majority of thresholds will be uplifted by £1,400 in line with the AfC pay award for England, however, the lowest threshold will remain frozen at a ‘discounted’ rate of 5.1% for the lowest earning staff, the DHSC said.

The new threshold changes will apply both to members who base their contribution rate on their previous year’s pensionable pay and those who base it on their current pensionable pay, it added. 

In its consultation response, published this week, the DHSC said the proposals had received ‘very mixed’ feedback, with 38% agreeing with them, 43% disagreeing and 19% either saying they did not know or not answering the question.

It added that reasons given for disagreeing were ‘mainly centred around the member contribution structure itself and the cost of contributing’ to the scheme, with some saying they would prefer to choose how much to pay in member contributions and others citing ‘concerns around the cost of living’.

And it said that some respondents ‘noted that there are members who are not employed on AfC terms and conditions and therefore felt that the uplifts should be calculated by a different process’. 

The DHSC said that the uplifts were designed to ‘reduce the possibility for a small number of [NHS pension scheme] members to have their take-home pay reduce as a result of crossing into a higher contribution tier solely because of an increase to the AfC pay bands’.

But it admitted that it is ‘not envisaged’ that the problem will be ‘completely eradicated’ by annually uplifting the thresholds.

And it said that although ‘there are different processes for determining the pay award for different parts of the NHS workforce’, the thresholds for all NHS pension scheme members will increase in line with the AfC pay award because this ‘applies to the highest number’ of members’.

Pensionable earnings thresholds in the member contribution structure will be uplifted annually by the AfC pay award, the DHSC said.

Respondents to the consultation included individuals, trade unions, employers and other organisations, such as the BMA and the NHS Business Services Authority (NHSBSA).

The Government confirmed in July that GP practices will not get funding uplift to cover the recommended pay rise of 4.5% for salaried GPs and staff.

Meanwhile, separate changes to the amounts GPs and staff will contribute to their NHS pension are also due to be implemented from 1 October, six months after the planned implementation date.

From next month, the top rate of contribution will be gradually reduced from 14.5% to 12.5%, with the maximum rate being set at 12.5% after two years, giving GPs a reduced pension contribution cost.

Accountants have warned this could cause problems for GPs’ own pensions contributions, and how partners manage staff pay.

A version of this article was first published on our sister title Pulse.