GP Locum Pensions: What to know for 2021

After a turbulent year, changes to pensions may have slipped under the radar. However, there have been warnings from the BMA to GP Locums and some changes in the 2021 budget which have caught the attention of the medical community. 

10-week rule 

Those locums who have received an NHS pension will be familiar with the 10-week limitation to submitting their GP locum form A and Bs. Positive news from the NHS Business Admin Services is that this 10-week rule will be suspended for another year into 2022 due to COVID-19 related pressures on General Practice. Some practices were struggling to pay within 10 weeks due to the overwhelming workload. This extension will prevent locums from missing out on significant pension contributions for circumstances out of their control.  

Warning to GP locums 

Vishal Sharma, BMA pensions committee chair, has warned doctors that they could be facing pension ‘traps’ as the pension system becomes increasingly complicated. GP locums may be particularly at risk due to the part-time nature of their work. Speaking on behalf of the BMA, he said that they felt it was ‘completely inappropriate’ that those working part-time in Career Average Revalued Earnings schemes may have to pay more per £1 of pension that those working on a full-time basis. As a result, the BMA wants contributions to be based on actual pay rather than estimating a full time equivalent (FTE).  

The talk included a case study demonstrating the effect of FTE-based pension contributions on GP locums. If a locum GP earns £42,000 PA from working two days a week in the 2015 scheme, through a system of annualised pay they could instead be paying 14.5% pension contributions on £182,5000.  

Sharma also warned doctors that at certain point, increases in pensionable pay could have significant tax implications. It is important to pay attention to maximum annual and lifetime allowances. [1] It is essential that in order for locums to feel valued in the healthcare profession that they are not unfairly hit by the systems which are supposed to protect their futures.  

Pension freeze announced in 2021 budget 

Rishi Sunak made the 2021 Budget announcement on 3rd March. It included the confirmation of a freeze to the lifetime pension allowance until April 2026. This allowance would usually rise with inflation and exceeding it could leave those saving for retirement with hefty tax bills.  

The BMA has warned that it could lead more doctors to reduce the amount of hours they work or take their retirement early in order to avoid tax bills. According to Vishal Sharma, this could seriously affect the NHS at a time when doctors are most in-demand as “people will retire sooner to not pay the tax.” This move by the government has also been criticised for complicating the ability of workers to plan for the long-term. [2] According to a BMA survey of 7000 doctors, the implementation of the lifetime pension freeze would 72% of doctors to consider retiring early and 61% to consider reducing their hours. [3]  

Do you think this move will help in the financial recovery from the pandemic? Let us know in the comments.  

If you are looking for locum work, visit our vacancies page.  

[1]  BMA          

[2]  GP Online        

[3] BMA