GP practices in England and Wales are legally required to pay 14.38% employer’s pension contributions to locums – here’s what practice managers need to know
CREDIT: This is an edited version of an article that originally appeared on the BMA
In England and Wales, every practice is accountable for the employer’s pension contribution concerning locums. Conversely, in Scotland and Northern Ireland, primary care organisations bear the responsibility for the employer’s pension contribution related to locums.
How to pay employer pension contributions
Locum completes part 1 of form A and sends it to the practice along with their invoice.
The practice completed form B (make sure you keep copies) and returns to the locum along with the payment including pension contributions.
Practices pay a pension contribution of 14.38% to the locum on top of their fee.
The employer’s pension contribution is based on the locum’s pensionable income, which is 90% of their total fee. The remaining 10% covers expenses.
The locum passes the payment and forms to PCSE.
PCSE administers the practitioner pension on behalf of NHS England, or to the local health board in Wales.
If you don’t pay contributions
Payment of the employer’s contribution is a statutory requirement. NHS pensions will report practices that refuse to pay it to the pensions regulator.
Practices could face legal action if:
They fail to pay employer’s pension contributions
They alter locum fees solely to avoid paying the additional contributions
Groups of practices in a particular area agree a set locum fee, as this breaches anti-competition law.
The cost of employer’s pension contributions is accounted for through the global sum.
Longer-term locums
After six months of continuous work with a practice, the locum is regarded as a type 2 practitioner in the pension scheme.
The practice must then pay their pension contributions as a salaried GP. Locum forms A and B cannot be used.
Practices should take advice about the tax position of long-term locums and consider using the HMRC employment status indicator.
Excluded locums
Employers do not need to pay pension contributions to locums who:
Are not part of the NHS pension scheme (a locum may only treat income earned from certain contracts as pensionable pay)
Work through locum agencies that are not recognised NHS employing authorities (and who therefore cannot pension their income)
Trade as limited companies.
Further considerations
Recovering Locum Expenses
Legally, the responsibility for covering the 14.38% pension contribution lies with the practice, not the individual partner seeking locum coverage.
GP partners should factor in the employer’s pension contribution when seeking reimbursement for the cost of locum coverage during their absence from the practice, such as for CCG duties.
Assess Your Insurance Coverage
Practices are advised to review their locum insurance policies to ensure they adequately cover the additional expenses related to employer’s pension contributions for locums.
Mileage Charges
When invoicing for mileage, some locums detail it as a separate expense on their invoices, while others include it in the total fee. The amount entered in box 1 on form A is what will be used to calculate the pensionable income and the corresponding employer’s contribution.
Practices should not expect locums to break down mileage from their fees to reduce the total in box 1.
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