GP Seniority Clawbacks
The following explains the situations which give rise to a seniority clawback and what can be done to anticipate one.
Some seniority facts:
- The seniority scheme will end completely on 31 March 2020
- Overall seniority spend is reducing by 15% in the intervening years to 2020
- Those GPs not in receipt of seniority on 31 March 2014 don’t qualify to receive it under the phasing out provisions
- Seniority was available to GP Partners after their second year in partnership – as such only GPs who became partners before 31 March 2012 are still eligible to receive it
- Final seniority factor figures are generally not known for four years after the year in question meaning that adjustments will still be made up to around the year 2024
- If superannuable earnings (excluding the seniority amount received) fall below two-thirds of the seniority factor then a 40% clawback of seniority is suffered. Below one-third and no seniority is available.
- The GP’s individual figure for each year comes from the GP’s certificate of pensionable profits and so such a certificate needs to be submitted annually, even if the GP is no longer contributing to the NHS Pension Scheme
A clawback is common where a GP has stopped working full sessions as it becomes more difficult for them to achieve the required earnings level to receive the full seniority entitlement.
The clawback may occur long after the payment has been banked, and potentially after the GP in question has changed practice or has retired.
The following are the current final seniority figures for GPs in England (as at March 2016):
- 2012/13 - £91,050
- 2011/12 - £92,034
- 2010/11 - £94,080
- 2009/10 - £93,678
- 2008/09 - £92,955
- 2007/08 - £90,375
- 2006/07 - £92,140
Interim figures in England whilst awaiting the final seniority factors are as follows:
- 2015/16 - £95,001 (Calculated interim figure)
- 2014/15 - £96,097 (Agreed Interim figure)
- 2013/14 - £96,183 (Agreed Interim figure)
- 2012/13 - £96,646 (Agreed interim figure)
Using the figure of £95k (as an estimate for 2015/16) two-thirds of this is approximately £63k and so earnings below this level gives rise to a future potential clawback.
Where a potential clawback is identified Practices will adopt one of two stances:
- “Wait and see” – adopt the stance that if and when the clawback is adjusted it is dealt with at the time of deduction – this is the most risky approach for the partnership as the GP in question may no longer be at the practice but the clawback could be made against the future practice income. A paragraph in the partnership agreement is extremely important to allow recovery from a retired partner if this is the case. Such a recovery may prove inconvenient for both the practice and retired partner
- “Number crunch and forecast” – perform an exercise to ascertain the likely outcome and reserve for this in the accounts so that GP in question has a clean balance because the clawback has already been provided for in the accounts. The partnership deed paragraph is therefore less likely to be relevant (but should still stay in just in case the averages for the year in question are higher than anticipated, therefore leading to a clawback). If a clawback doesn’t occur (i.e. the final seniority figure is higher than the interim estimates meaning that the two-thirds test is met) then it is likely to be appropriate for the amount previously reserved in the accounts to be released back to the GP.
As seniority gets relegated to the pages of the history books, in the period between now and 2024, at a time when a large volume of GPs will be retiring, it is important not to overlook this income source and the complexities surrounding it.
If you think MHA MacIntyre Hudson can assist you or your practice on this topic then please get in contact with a member of our specialist Healthcare team.