The effect on practices income
of GP's employer's contributions being funded through the global
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
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.