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Reforms - NHS pensions and GP companies

What GP provider organisations need to know about NHS pensions, by Polly Ellison.

Pensions: seek professional advice because the law is complicated (Photograph: Istock)
Pensions: seek professional advice because the law is complicated (Photograph: Istock)

Under the proposed NHS reforms, individual or grouped GP practices (known as GP provider organisations, or GPPOs) can provide services to clinical commissioning groups, where this makes for best value in terms of both quality and cost. If staff are to stay in (or become members of) the NHS pension scheme, GPPOs need to be 'employing authorities' or have 'direction employer' status.

Employing authorities
Employing authorities are defined in the rules of the NHS pension scheme and include GMS and PMS practices and out-of-hours providers. A GPPO must also be set up in a specific legal form.

Broadly, groups of GP practices or companies limited by shares (where those shares are held by individuals or bodies within the NHS family) should qualify. However, if the GPPO is formed as a company limited by shares and some shares are held by individuals or bodies not within the NHS family, the position becomes more complex. Status then depends on the particular circumstances and contractual arrangements.

Companies limited by guarantee and limited liability partnerships do not qualify as employing authorities so, if these structures are used, the GPPO needs to consider direction employer status.

Direction employers
The DH has discretion to allow former NHS staff transferring out of direct NHS employment to remain in the NHS pension scheme, by granting direction employer status to their new employer.

This is only done where the new employer provides NHS services and is from the not-for-profit sector (for example, a company limited by guarantee or a community interest company). A company limited by shares may not qualify.

The granting of direction employer status is discretionary. There is no guarantee staff transferring to or employed by a GPPO will be eligible for the NHS pension scheme so early discussions with the NHS pension scheme and the DH are recommended.

Alternatives to the NHS pension scheme?
If GPPOs are structured in a way that means the NHS pension scheme is not available, there are further complications.

Comron Rowe, head of the pensions team at Foot Anstey LLP, explains: 'There is a government policy which currently requires all staff transferred from the NHS to be provided with access to the NHS pension scheme or to a "broadly comparable" pension scheme, which can be very expensive.

'The future of this policy is currently under review but, even if abolished, there are complications in relation to NHS pension scheme redundancy and early retirement benefits transferring under Transfer of Undertakings (Protection of Employees) Regulations 2006 as a result of European case law.

'GPPOs should tread very carefully if they do not provide access to the NHS pension scheme or their own broadly comparable pension scheme.'

What now?
The law in this area is complicated so it is sensible to seek appropriate professional advice when structuring your GPPO.

  • Polly Ellison, company secretary, Portal Health Cheltenham Ltd, supported by Foot Anstey LLP, solicitors.

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