Over the past year we have increasingly been asked questions about type 2 NHS pension contributions and the pension certificate for a variety of reasons, such as:
- Do I need to reclaim or repay the end of year adjustment processed on our Open Exeter statement with the salaried GP?
- What figure do I use for my salaried pensionable earnings on the type 2 certificate?
- Why don’t the amounts deducted via Open Exeter agree to the amounts on the payroll?
- Why aren’t there any deductions being taken for our salaried GPs on Open Exeter?
- What locum income do I include on the pension certificate?
- Do all of my pensionable positions go onto the pension certificate?
- Do I pay the salaried GP’s contributions along with the other employee’s each month?
Amongst a variety of others.
Some of these have more straightforward answers than others but below are answers and comments to some of the more common questions I have come across recently:
1. What figure do I use for my salaried pensionable earnings on the type 2 certificate?
A common document which is usually available to all salaried employees is the P60. In most cases, this is not going to be sufficient for getting your pensionable income details, as it shows your taxable income instead – which is your gross salary less any employee’s contributions deducted – the two figures we need for the certificate. Instead, your March payslip for the relevant tax year is what you will need. Often on the payslip there will be the details of pensionable income for the year on there as a standalone detail, but in cases where it isn’t, then your pensionable pay will likely be your year-to-date gross pay figure. This can differ if you are paid anything which is non-pensionable though so if in doubt you should check with your employer who will be able to give you your pensionable income. Your annual employee pension contributions will also be detailed on your payslip too.
2. Why don’t the amounts deducted via Open Exeter agree to the amounts on the payroll?
By the 1st of March each year, the practice is required to submit an estimate of pensionable profits form to PCSE which details all the GP partners, salaried GP’s and non-GP providers on it with an estimate of their earnings for the coming year. This form also requires the practice to take into consideration an estimate of any other pensionable income for the coming year in order to assign the correct tiered rate for the employee’s pension contributions. Once submitted to and processed by PCSE the monthly deductions will be adjusted via Open Exeter for the practice based on both the estimated practice earnings and employee’s tiered rate declared. If a salaried GP’s earnings match the estimate provided, then there will be no differences between the payroll and Open Exeter.
If a salaried GP does any pensionable overtime, increases or decreases sessions, or has any other adjustment to their salary in the year then there will be differences at the end of the year. Any changes to the earnings of a salaried GP (and both GP and non-GP providers) can be updated with PCSE by resubmitting the estimate of pensionable profits form with the new figures.
If an external payroll provider is used, then it may be that the employee’s tiered rate could only factor in the earnings from the practice so they will need to be advised what tiered rate should be applied for the year based on all pensionable income which has been declared on the estimate of pensionable profits form.
3. Why aren’t there any deductions for our salaried GPs on Open Exeter?
In order to start deductions being taken for a new salaried GP then an NPL3 form needs to be completed and submitted to associate that GP with the practice. After this, an estimate of pensionable profits form needs to be submitted to incorporate the new salaried GP so that PCSE know how much to deduct each month and when from. There may be a delay whilst the forms are prepared and processed but the deductions via Open Exeter will be backdated to the start date of the salaried GP.
4. What locum income do I need to include on the type 2 pension certificate?
Each month pensionable locum income should be summarized and submitted to PCSE using locum A & B forms and this will detail the start and end date of the work performed in each role or practice. The last date worked in the practice is the date which needs to be considered for which tax year’s pension certificate it is required to be included on. It doesn’t matter which year the locum B form relates to so work between the 25th of March 2021 and the 10th of April 2021 on the April 2021 locum B form would be included on the 2021/22 type 2 pension certificate. Work between the 15th of March 2021 and the 30th of March 2021 on the April 2021 locum B form would be included on the 2020/21 type 2 pension certificate.
If you only have locum income for the year, then a pension certificate is not required according to the guidance from NHS BSA. Another point to note about locum work is that the income must be recorded on a locum A & B form and submitted to PCSE within 10 weeks of the work being done, as after the 10-week window it automatically becomes non-pensionable. During the current climate with Covid the 10-week window has been suspended but may return and be enforced in future.
5. Do all of my pensionable positions go onto the type 2 pension certificate?
In a word no. It should include all practitioner pay and this would include salaried roles at GP practices, locum income pensioned via the A and B forms, any type 1 pensionable income in the year (this would be your pensionable profits if you were a partner at a practice in the year from a separate type 1 pension certificate) and Solo income. Officer positions are not required to be included on the certificate and these can include working for hospitals and other NHS trusts and some work for CCGs. If you are usure then speak to your accountant who will prepare your pension certificate to ask for their advice.
6. Do I pay the salaried GP’s pension contributions along with the other employees each month?
Again, no. In point 2 above the estimate of pensionable profits form is submitted and deductions are taken via Open Exeter which is how a GP practice pays the employee’s, employer’s and any added years pension contributions for the salaried GPs.
The contributions are calculated and deducted from the salaried GP’s gross pay each month as usual via the payroll, but the payment over to NHS Pensions is only for the non-GP staff members, otherwise the practice would be paying the contributions twice for salaried GPs.
At the end of the year the type 2 pension certificate is used by PCSE to reconcile the difference between the amounts deducted via Open Exeter and the payroll records – which I will come onto next.
7. Do I need to reclaim or repay the end of year adjustment processed on our Open Exeter statement with the salaried GP?
Now this is the question which has multiple answers as until further work and reconciliations are performed, the answer won’t be known.
The end of year adjustments via Open Exeter are processed by PCSE only once a type 2 certificate has been submitted and accepted. When the type 2 certificate is prepared it produces a balance either under or overpaid by the salaried GP for each practice they worked at during the year. This figure is highly unlikely to be what will be adjusted for via Open Exeter as they are calculated from two different reconciliations.
The balance calculated on the type 2 certificate is the amount which has been under or overpaid by the salaried GP and is the amount which needs to be repaid to the practice or paid to the salaried GP regardless of what has gone through Open Exeter. The type 2 certificate reconciles the mounts which have been deducted via the payroll, so essentially the amount the GP has paid themselves.
The end of year adjustment via Open Exeter is reconciling the amounts which have been deducted on a monthly basis against the amounts which should have been deducted based on the final pensionable income for the salaried GP declared and submitted on the type 2 certificate.
There are a few reasons why a salaried GP would owe something back to the practice or would be due something from the practice as highlighted on their type 2 certificates on the assumption that the payroll has been processed correctly each month to take into consideration any changes to pensionable pay each month.
- If the salaried GP increased or reduced their sessions during the year, then this could move them into a different tiered rate for their employee’s contributions. This would have been updated on the monthly payroll but wouldn’t adjust prior months where the contributions were deducted at a higher/lower tiered rate.
- If the salaried GP did some overtime to move them into a higher tiered rate – for example, if a 2 session salaried GP worked 8 sessions to cover a partner on sick leave for 2 months and then returned to working 2 sessions again.
- If the salaried GP’s pensionable income from other sources was different to what was anticipated at the start of the year, meaning that they actually fell into a different tiered rate. A common example of this is during the lockdowns for Covid locum GPs weren’t necessarily required as often so their pensionable locum income was lower than expected.
For the employer’s pension contributions, any adjustments which happen via Open Exeter are for the practice and never for the salaried GP. This is because the amount calculated via the payroll is a notional figure which isn’t paid anywhere or deducted from the salaried GP’s salary, so there isn’t anything to adjust for as no payments have been made with the salaried GP. The end of year adjustment via Open Exeter will be to reconcile the amounts which have been deducted throughout the year already via Open Exeter to the correct amount due based on the actual pensionable earnings from the practice which is known at the end of each tax year.
Hopefully this gives an insight into the various complications surrounding the NHS pensions for type 2 practitioners and how each one can arise and be rectified.
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