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Locum pension contributions: advice for locums

The issues

As of 1st April 2013, GP practices in England and Wales have become responsible for the employer’s pension contributions of the locums they engage. These payments had, until then, been made by Primary Care Organisations (PCOs). There has been no change to the arrangements in Scotland and Northern Ireland, where employer’s pension contributions for locum GPs remain the responsibility of PCOs.

Whenever this has been proposed in previous years it has been resisted in negotiation by the BMA’s General Practitioners Committee (GPC). When it was proposed again towards the end of last year, the BMA made clear to the Government our strong objections, through our responses to the consultation on the GP contract, as well as to the consultation on the draft pension regulations, which brought about the change. We expressed our concerns about the potential negative effects this would have on individual locum GPs and practices.

However, despite this, the Department of Health confirmed in late March that practices would take over responsibility for funding employer’s pension contributions for the locums they engage from 1 April 2013. The funding has been moved from PCO budgets and for General Medical Services (GMS) practices is being transferred into Global Sum Equivalent payments. An average GMS practice with around 7,000 patients will receive an extra £1,000 a year as a result.

The Department of Health has also stated that it is for NHS England (formerly the NHS Commissioning Board) to decide how locum employer pension contributions will be funded for Personal Medical Services (PMS) and Alternative Provider Medical Services (APMS) practices. We have made clear that, pending a resolution of the problems with the current arrangements, we expect NHS England to provide a similar increase in baselines to cover this.

All practices are responsible for funding the employer contributions. However, the administrative process is such that locums themselves must pass on the employer contribution for any pensionable income to their local Area Team at the same time as they pay their employee contributions. The Department of Health has stated that it expects locums to invoice practices with a separate charge for the employer’s pension contribution, on top of their fee. 

Locum Forms A and B, which locums complete to show their pensionable income, have been updated with a separate box for the employer’s contribution. The forms are available on the NHS Business Services Authority website.

Find the forms on the NHS Business Services Authority website

We have made our concern about the effects of the changes on individual locum GPs and on practices clear to government. The BMA Chair of Council of has written to the Secretary of State for Health, Jeremy Hunt MP, to ask for arrangements to be changed , so that Area Teams in England are responsible for payment in much the same way as PCTs were, and that Health Boards in Wales remain responsible for making the payments.

In particular, we are concerned that the money associated with locum pension payments is being distributed to all GMS practices through Global Sum Equivalent funding. These arrangements take no account of the different levels of reliance that practices have on locums. The increased costs for practices with above-average locum use will not be covered by the small increase in practice funding.

Single-handed and smaller practices are likely to be unfairly affected as they are more dependent on locum cover for holidays and sickness than larger practices. We have repeatedly made this point to the Department of Health.

However, under the new arrangements based on our calculations an average practice with approximately 7,000 patients should not lose out financially if their total locum cover costs are less than around £7,900 per year for a locum with pensionable income (which would involve employer pension contributions of approximately £1000).

Practices should note that payment of the employer’s contributions is now a statutory requirement and those practices that do not comply can be referred to the Pensions Regulator and legal action taken against them.


Guidance for locums

This is general guidance for locums. For tailored advice you should seek personal financial assistance.

Locums must show the employer's contribution as a separate charge on their invoices. It is important that invoices clearly show the rate and amount of the employer’s contribution.

The employer's contribution rate is 14.38% in England and Wales (including the 0.08% pensions administration charge), 14.9% in Scotland and 16.3% in Northern Ireland.

Use our template pro forma invoice

The appropriate rate is charged on 90% of the total locum fee. This is the pensionable part of the fee, as 10% is regarded as being used to cover expenses.

The process for making the payments will be as follows: 

  • The employer’s contribution (based on 90% of the fee paid to the locum) must be paid to the locum along with the fee.
  • Locums themselves must forward the payment to the Area Team along with their employee’s contribution. In England, forms and cheques should be sent to their local Area Team and cheques should be made payable to ‘NHS Commissioning Board’. In Wales, forms and cheques should be sent to, and made payable to, the Local Health Board.
  • 'GP Locum Form A', which validates that a locum has worked for a practice, should still be used. The updated form includes a statement to say that the locum wishes to pension the income and to show the amount of employer’s contribution paid.
  • The same deadlines for payment still apply – the locum is required to send the cheque, accompanied by the form, by the 7th day of the month following the month in which the income was earned.
  • 'GP Locum Form B' (a record of all locum work undertaken and recognised in that month) is also being retained..

Locums must pass on the employer’s pension contribution to the Area Team/ Local Health Board. Failure to do so could result in legal action.

Updated versions of the Locum A and Locum B forms are available on the NHS Pensions Agency website and must be used for all work completed on or after 1 April.

Download the forms from the NHS Business Services Authority website

Some locums choose to list mileage as a separate fee on their invoices and others include it as part of the total fee. The total amount entered into Box 1, whether this is inclusive of mileage expenses or not, will be used to calculate pensionable income.

It is essential that GP locums capture all work that they have completed up to 1 April 2013 on their March 2013 Form B to ensure that the employer’s contributions for this work is not paid by practices. They should not declare work completed before 1 April on either their April Form B or May Form B.

As now, the ’10 week rule’ will apply, so locums will not be able to pension work that was undertaken more than 10 weeks previously. However, for March this deadline will be extended by a period to be determined to ensure that all work undertaken before 1 April 2013 has been captured.

It is possible for a locum to treat as pensionable pay income earned from only certain contracts as a locum. Unlike other scheme members, locums do not have to pension all of their income if they do not wish to. This option only applies to doctors who work solely as locum GPs.

Note also that it is not possible for a locum to pension only part of their fee for a particular piece of work, they must either pension the full amount or none for each contract worked. We would expect that that the decision to not pension the income for a contract would only be a preferred option for locums near to the end of their careers, particularly former partners who have chosen to become locums to reduce their work commitment before retirement, or for tax reasons (if they are close to exceeding either the Annual Allowance or the Lifetime Allowance), and not for any other purposes.

As before, groups of practices in a particular area should not agree a set locum fee. This would breach anti-competition law and the practices would be at risk of legal action.

Locum GP BMA members with questions about their pensions should contact the BMA Pensions Department. If a locum BMA member has concerns about issues related to the pensions changes, for example non-payment or late payment of fees, they must contact the BMA’s First Point of Contact advice service.