Both death in service benefits and annualisation are complex, can have serious financial consequences, and highlight the need for a fairer system. We continue to press Government for change, while also sharing practical steps you can take now.

What is annualisation and why is it a problem?

Annualisation was introduced from 1 April 2015 and applies specifically to practitioner members of the 2015 NHS Pension Scheme.

Annualisation is where a locum GP will pay a pension contribution tier based on their annualised earnings, rather than their actual earnings. This results in those GPs paying more in pension contributions, compared to Type 1 and 2 GPs (employed throughout the pension year), but for the same pension benefits.

This is unfair and the BMA has never agreed with this approach. We continue to put pressure on Government to address annualisation and have also raised it as an agenda item for discussion at the NHS Pension Scheme Advisory Board and Technical Advisory Group.

There is, however, action locum GPs can proactively take to avoid being annualised, including three workarounds. If you are impacted by annualisation, I urge you to take a look and consider taking one of these actions.

Furthermore, if you are in scope of the McCloud remedy, your service for the remedy period (1 April 2015 to 31 March 2022) will be rolled back to your legacy scheme (1995/2008 section) and a refund of excess contributions paid as a result of annualising will be due to you, net of tax relief and interest. This is because in the 1995/2008 sections your contribution tier is based on your actual earnings, not annualised earnings.

The gap in death in service protection

Death in service benefits are an important benefit of the NHS pension.

Under the current regulations, a GP who works exclusively as a locum is only covered for death in service benefits if they die on a day when they are working and making pension contributions.

If they die on a day when they are not due to work, they will be treated as a deferred member and receive the less favourable death in deferment benefits.

This creates a significant concern for locum GPs because it can leave families without the full protection they might reasonably expect from NHS Pension Scheme membership.

It also appears inconsistent with annualisation rules: locum GPs are treated as if they are in the scheme 365 days a year for the purposes of having their contribution rates calculated, but are not treated as being in active service across the year for death in service cover.

We believe that locums should be considered as active members of the pension scheme between shifts worked and should be eligible for full death in service benefits. We continue to engage with DHSC on this issue.

What can locum GPs do now?

– While we continue to push for a fairer system, have a look at the annualisation workarounds and see if you can apply any of these to your working pattern to help lift you out of annualisation.

– Just as importantly, make sure your pension record is up to date. Keeping forms accurate and submitted on time can make a significant difference. Given ongoing issues with the management of GP pension records in England, we have produced a step by step guide with template letters to help GPs proactively fix any missing years of pensions data.  

– Read more about the NHS Pension Scheme. 

Krishan Aggarwal is deputy chair of the BMA pensions committee