GP Pension Changes: What You Should Know

For the first time in over half a century, the number of general practitioners has sharply declined. At least two-thirds of GPs are now retiring early, which is double the amount compared to five years ago.

There are various reasons for the drop in GPs, such as increased stress and lack of support. One of the main factors (which has drawn a lot of attention in recent months) is pension tax, which has shown to have contributed largely to this issue.

In light of this, the government has made changes to the GP pension in the UK. Here’s what you need to know and how you might be affected.

What are the GP pension changes?

The government has introduced a review to make GP pensions “more flexible” to try and tackle retention issues.

The government will now modify the pension system to qualify high-earning GPs, consultants and other senior clinicians. The government also aims to build up pensions at a steady pace, without GPs having to deal with significant tax changes.

In addition, a 50:50 scheme has also been suggested. This will only affect those who have built up a certain amount of money in contribution to their NHS pension. This scheme will make sure that doctors minimise their normal pension contributions. In this instance, the government would obtain the other half of their pension.

What are the limitations?

These changes are being criticised by many for being too risky. For instance, various limitations exist regarding annual allowance without adding the influence of tax penalties.

Under this new scheme, the highest- earning GPs will have to pay 14.5% in contributions as part of the current NHS pension scheme. Yet, an annual allowance of £40,000 exceeds the amount of money that can be saved in a pot annually. Notably, annual allowance begins to decrease (from this level) for those earning a total income of over £150,000 per year.

According to various GP leaders, the damage already done to recruitment and retention can be traced back to annual allowance and concerns over big tax bills. These damages involved doctors taking early retirement or reducing their hours.

The BMA (British Medical Association) has also expressed concerns about the current taxation system, as well as its implications on the wider NHS and patient care. The BMA also aim to discuss further options for pension flexibility.

What are the possible solutions?

The BMA plans to make temporary mitigations in response to fears about the pension taxation system. If applied, these mitigations would prevent experienced doctors from reducing hours of patient care or from leaving the NHS.

The pension scheme is complex and would vary for each individual circumstance. Notably, it’s possible that there needs to be further opportunity to recycle an individual’s pension contribution, on the percentage pay that’s no longer pensionable. The main focus, therefore, is to find a better system for employees at all points on the pay scale.

With more flexible, options proposed in the GP pension changes, the NHS hopes attract the “best people” for the job, while upping retention rates.

What happens now?

At the moment, there are still various reforms and ideas being organised. These ideas will focus on giving clinicians more opportunities to manage pensions while providing a fairer deal for tax players, doctors and their patients. Overall, the aim is to help GPs have greater control over their futures.

However, there is still progress to be made. Recently, there has been a “sharp rise” in the number of GPs searching for pension advice, and some GPs are facing personal bills of at least £50,000. According to Matt Hancock, the Secretary of State of Health and Social Care, GP pension changes are due to the effect on GP retention.

As a result of these complex new changes, GP workers are now starting to retire early or only work for half of the week. Workers are now worse off than if they were working double the hours, full-time.

If you’re a general practitioner, this may be the right time to consider an out-of-hours role. You can contribute to your pension and work at a more steady, flexible pace. This will also provide you with lighter work-loads resulting in less stress. Interested in finding out more about becoming an out-of-hours GP? Visit our jobs page.