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Dealing with locum GPs' superannuation

Jenny Stone explains how paying the employer's share of locums' NHS pension contributions will impact on practices' finances.

Practices should review their use of locums to avoid extra expense (Picture: iStock)
Practices should review their use of locums to avoid extra expense (Picture: iStock)

GP practices in England and Wales became responsible on 1 April 2013 for paying the employer’s superannuation contributions for those locum doctors they hire who are members of the NHS Pension Scheme (NHSPS).

In Scotland, health boards remain responsible for the employer’s share of locums’ superannuation.

It is not yet known if practices in Northern Ireland will have to take over paying the employer’s share.

Global sum equivalent uplift

To compensate for the increased cost, the global sum equivalent (GSE) for practices in the two countries affected is being uplifted by a small amount – 0.15% for England practices (percentage for Wales to be confirmed).

PMS practices should receive the same 0.15% uplift in their baseline funding.

Paying the employer’s contribution

Practices only have to pay the employer’s superannuation for locums who currently pay into to the NHSPS.

They are not required to pay the employer’s superannuation for locums already receiving their NHS pension benefits or who choose not to contribute to the NHSPS or who trade through a limited company.

The employer’s superannuation rate for a locum is 14%.

However, as a locum GP’s pensionable income is 90% of the fees charged, the cost to the practice is less than 14% of the full invoice.

Locum form A parts 1 and 2

If a locum contributes to the NHSPS, they are required to complete NHSPS locum form A part 1.

The locum then needs to send Form A to your practice so that you can certify from they have carried out locum work at the practice.  

You should check that the version of form A used is the one that applies from from 1 April 2013 at ‘Quicklinks for Employers’ on the NHSPS website

The practice then needs to complete part 2 of form A.

Example 1: completing part 2 of form A

The practice needs to:

  • Enter the amount of the locum fee in box 1.  This will be the agreed amount as per the locum’s invoice. For example, if the invoice total is £2,000 this is the amount you need to enter.
  • In box 2, enter 90% of the amount in box 1. In this example the amount for box 2 is £1,800 (£2,000 x 90%).
  • In box 3, enter the employer’s 14% of the pensionable income from box 2. This is £252 (£1,800 x 14%).
  • Fill in the remaining sections in form A  which are as per the pre-1 April 2013 version.

What the practice pays the locum

You need to pay the locum the amount on their invoice plus the employer’s superannuation.

In the above example, you would pay the locum £2,252: their £2,000 fee plus £252 for the employer’s contribution.

Locums working for a practice on a regular basis for more than six months are classed as long-term, fee-based locums.

The NHS Business Authority, which administers the NHSPS, does not regard long-term, fee-based work as GP locum work.

These locums will be unable to pension their locum income using the locum A (and B) forms and, therefore, the practice is not required to pay the employer’s superannuation.

Financial implications for practices

  • If a practice uses a lot of locums, it is likely to be worse off.
  • The uplift of 0.15% will not fully compensate them for the cost of the employer’s superannuation contributions.
  • If the GP partners cover for each others’ absences, the practice will still benefit from the 0.15% uplift.

Locums are expensive.With the extra cost of the employer’s superannuation and further cuts to practice income, locums will be an expense that practices will want to reduce.

Practices should review their use of locums and consider whether they can reduce the fee rates they pay to locums who are contributing to the NHSPS.  

Example 2: cost of paying your locums’ superannuation

  • A GMS practice with 8,000 patients spends £90,000 a year on locums.

  • The locums all contribute to the NHSPS

  • They have a global sum equivalent of £533,000, the cost of the employer’s superannuation to this practice is:

Uplift to global sum equivalent (0.15% x £533,000)

£799

Employer's superannuation for locums (£90,000 x 90% x 14%)

£11,340

Net cost to the practice

£10,541

This practice would need to reduce their locum costs to £6,341 to avoid this additional cost

  • Jenny Stone is a partner at specialist medical accountants Ramsay Brown and Partners. She is also Medeconomics' finance expert. Click here to find out how to ask Jenny your questions.

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