GPs under threat of seniority pay reclaim
Revised estimates for average GP pay spanning 2004 to 2006 could result in claw back of overpaid seniority pay, comments Neal Carter member of UK200 Healthcare Group.
Seniority payments reward experience, and entitlement starts once a GP has been a Principal in a practice for at least 2 years.
The amount of seniority to which a GP is entitled will depend upon 2 factors:
1. Reckonable service – the number of years worked as a doctor in the NHS starting with the date the doctor first registered with the GMC.
2. NHS pensionable profits – based on the GP’s annual certificate as compared to the national average.
To receive the maximum entitlement for the number of years reckonable service a GP’s pensionable profit must exceed two thirds of the national average; GPs will receive 60% if their pensionable profit is between one third and two thirds of the national average and zero if less than one third of the national average.
The national average NHS pensionable profit is calculated by dividing the total of all NHS profits for all GP providers in the country by the number of GP providers suitably adjusted for part-timers.
Although the system has been in operation since 1 April 2005 no final national average figures had been announced until July of this year. Consequently calculations were based on interim average pensionable profit figures agreed by the General Practitioners Committee and the Department of Health.
In July the final national average figures were released by the NHS Information Centre for 2004/05 and 2005/06 and in both cases are higher than the interim figures used to calculate seniority entitlement.
For 2004/05 the final figure of £81,123 is £6,123 more than the £75,000 interim and the 2005/06 final figure of £91,123 is £10,183 more than the £80,940 interim. These revisions have retrospective implications for those GPs, part-timers in particular, that claimed seniority pay based on the original entitlement figures.
Applying the new figures means that some GP incomes will now be less than two-thirds of the revised averages and are therefore insufficient to meet the full seniority entitlement requirement.
Those GPs that fall into this category are left with an ‘overpayment’ to which they are not entitled amounting to 40% of their seniority pay for each of the years 2004/05 and 2005/06.
Seniority payments are included in the funding received by the practice from its primary care organisation (PCO). It is likely that PCOs will look to recover the overpayments directly from practices, leaving the practices to liaise with any partners affected by the changes and organise the repayments. This could affect partners who have retired and left the practice and will not therefore be an easy exercise.
Practices should review the seniority payments received for 2004/05 and 2005/06 in the light of the final national average figures.
Additionally given the fact that seniority pay entitlement is based on an estimate of pensionable profits provided to the PCO each year, practices should review seniority entitlement annually given that actual pensionable profits can vary significantly from those estimated.
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Neal Carter is a Principal in Hillier Hopkins LLP Chartered Accountants and Tax Advisers and a member of the UK200 Healthcare Group. Neal is head of the firm’s healthcare team advising GPs and medical practicesneal.carter@hhllp.co.uk www.hillierhopkins.co.uk
UK200Group is an association of separate and independently owned and managed accountancy firms and lawyer firms.
UK200Group does not provide client services and it does not accept responsibility or liability for the acts or omissions of its members. Likewise, the members of UK200Group are separate and independent legal entities, and as such each has no responsibility or liability for the acts or omissions of other members.
UK200Group contact:
Maggie Rolfe, Communications Officer margaretr@uk200group.co.uk www.uk200group.co.uk
