GPs - NHS Pension Scheme Changes from 1st April, 2008

End of Capping

• GPs who joined the NHS Pension Scheme post 1989, or who have had one or more than one year’s absence since that date, have been capped for pension purposes and have not been able to superannuate all of their NHS earnings. The limit for 2007/08 is £112,800.
• GPs who have NHS earnings in excess of this amount will face a substantial rise in their liabilities from April 2008 onwards.

Increase in Employee Superannuation Contributions

• The ‘employee’ contribution, presently 6%, changes to:

NHS Earnings                 %
Up to £19,165                 5
£19,166 to £63,416       6.5
£63,417 to £99,999       7.5
Above £100,000            8.5

• Most GPs are therefore going to see an increase of between 1.5% and 2.5% on their NHS earnings, without any increase in any NHS benefits.

Added Years

• The present ‘added years’ scheme will end on 31st March 2009. Applications to take advantage of the scheme must however, be made by 31st March, 2008.
• A new added years scheme is to be introduced from 1st April, 2008 enabling GPs to purchase up to £5,000 in additional pension.

Dynamising

• Instead of being based on the increase in average earnings, dynamising will in future be based on the increase in the retail price index plus 1.5%.

Extra Lump Sum

• On retirement GPs presently receive a tax free lump sum equivalent to three times their annual pension.
• From 1st April, 2008 it will be possible to commute an additional part of the pension in exchange for an increased lump sum, up to certain limits.

Abatement

• GPs who retire before age 60 suffer an abatement of their pension if their total earnings, including their pension, are more post retirement than they were before. This restriction continues until they reach age 60.
• From 1st April, 2008 this restriction will be largely removed.