Pensions and Superannuation Presentation

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Pensions and Superannuation Presentation

• May 2005

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Pensions update

• News vs. Reality
• Current staff will retain NPA 60 years
• Maintain current pension benefits -so no
  automatic new benefits.
• Next round negotiations
• 1. Improvements to current scheme
• 2. What the new scheme will look like

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Pensions update

• Negotiations - Jan thru May
• NHS specific between staff side - EO
• Consultation - May / June
• Implementation
• 1. As soon as is practicable
• 2. Not likely to be before April 2007

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Three things at the same time

• 1. Legislative changes
• sexual equality, age
• 2. Inland Revenue changes
• annual and life time limits
• 3. NHS Pension Review
• current new scheme

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Specific Issues

• Annual and Lifetime Limits
• 1.5 million life time limit
• Added years / AVCS
• Information on Pensions Agency website.
• End of accounting year - individual choice
• Cap on NHS pensionable earnings

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Dynamising Factor

• Now related to professions actual profits
• )
• Mechanism
• DF determined on GP profit
• After end financial year - accounts
• For 2003-04, Estimated 8.8
• Actual - well...

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DF - 2003-4

• 12.9 !
• Estimated 8.8 (difference is nearly 50)
• Estimate based on expense / profit ratio under
  red book.
• Estimated over new GMS 36
• New Estimate over new GMS 45 - 48
• The DOH and the DF...

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Specific issues

• Superannuation form
• Modified version on Pension Agency website
• Along with new guidance
• Always was work in progress
• Taxable status of employers contributions
• Treat all as employee contributions
• Tax - end Jan Superan - end Feb

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Wheres the superan money then?

• 1. Pre-April 2004 4 added to 50 pp in GS
• 2. New money (i.e. post April 2004)
• QOF 2.50 04/05 and 4.00 in 05/06
• 21p added to GS pp Oct 2004
• so...

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For example, practice with 10,000 patients and
1000 QOF points

• 10,000 _at_ 4 (added to GS) 40,000
• 10,000 _at_ 21p (added to GS) 2,100
• 1000 pts _at_ 2.50 2,500
• Employers 14 in resources
  Total 44,100

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Why the / any shortfall?

• 1. Not enough put into nGMS in first place
• 88 million vs.120 million (for England)
• 2. More new superannuable income
• Dispensing, Premises, etc
• 3. More profit from nGMS than anticipated

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PMS - what about us?

• Equally responsible for payment - 20p /
• PCOs have funds from Indexation Transfer
• Local negotiations - how distributed to practices
• Superannuation for new income
• PCT allocations uplifted (21p) how distributed?
• Same QOF increase of 2.50 / 4 per point

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So, my pension will go up then?

• Increased personal earnings e.g. QOF, ES,
• Increased old work now superannuable
• Increased pensionable income e.g. Premises
• Dynamising factor
• estimated 8.8 10.8 12 31.6 (33)
• At least 12.9 22.8 34.7
• Prob 12.9 / 18-20 / 8-10 45 - 48

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Will I have to pay more?

• Yes.
• Increased personal earnings (6)
• Increased employers on earnings - 14
• Not fully funded by Government (88/120M)
• Increased earnings above estimated
• Benefits - bigger pension when retire, or can go
  earlier etc

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...and dont forget about the tax!
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Bottom line

• If after youve paid the extra tax
• and the extra superannuation
• and the extra costs incurred
• and your end of year profits are still higher by
  a goodly portion
• - more money in your pocket, better pensions, and
  reduction in working hours - no OOH