on practices income of GP's employer's contributions being
funded through the global sum
Practices should be receiving their indicative budgets
from their PCT detailing an estimate of the practices funding
under the new contract. Included in these budgets is a final
summary, which is intended to give the practice information
on monthly cash flow, but the figures are misleading as
deductions for superannuation have been omitted.
The global sum and the Minimum Practice Income Guarantee
(MPIG) correction factor include amounts for the GP's own
superannuation contributions and the GP's employer superannuation
contributions which is the PCT contributions for the GP's
as the notional employer.
Under the old GMS contract the GP's own superannuation
contributions were deducted before payment was made for
fees and allowances and the practice would receive the net
amount. At the same time the PCT would calculate the employers
superannuation contributions for the GP's and pay this direct
to the NHS pension agency. As the PCT dealt with the GP's
employer's superannuation contributions directly, practices
have never had to budget for this cost before.
Under the new contract practices will need to consider
the impact of paying the GP's own superannuation and the
GP's employer's superannuation contributions out of their
funding. The example (see below) illustrates the funding
for one quarter and the total for the year together with
the deduction for the GP's own and employer's superannuation
contributions. The amount of superannuation included in
the example is estimated based on the superannuation, which
was paid for the Dec 2003 quarter. From the example this
practice would pay about £54,600 per annum out of
their gross funding for superannuation, if some GP's are
also paying added years then this amount will be higher.
The employer's superannuation is going to increase from
1st April 2004 from 7% to 14%. There will be an adjustment
to the global sum to take account of the rise in employer
contributions, (this has not yet been agreed). In the example
employers superannuation has been calculated based on 7%
as the amount of the global sum includes employer's superannuation
at 7%. Once it has been announced what the adjustment will
be to take account of the increase in employer's contributions,
practice will need to recalculate the employers superannuation
at 14% to see the effect on their income.
It has been predicated that GP's superannuable income will
increase with the change under the new contract that superannuable
income will based on NHS profits (definition of NHS profits
still to be agreed). If this is the case then practices
could find that more of their funding will be spent on the
GP's own and employer superannuation contributions.
The way that superannuation is paid is also changing. Practices
will be required to make payments on account for the GP's
own and employer's contributions. Practices will need to
agree with their PCT the amount that represents a reasonable
approximation of superannuation. PCT will then deduct this
from practices global sum monthly payment (GSMP).
At the end of the year the practice will calculate each
GP's superannuable income and forward these details to the
PCT in the required format. Once the GP's superannauble
income has been agreed then the PCT will need to calculate
the total amount of superannuation for the GP's own contribution
and employer's contributions. The PCT will need to calculate
whether there is a balance of contributions, which will
need to be paid, and this balance will be deducted from
any payment to the practice or the PCT could request that
the practice pay the balance if a deduction cannot be made.