PCSE changes to historic Type 2 pension adjustments

PCSE has recently clarified how pension contribution adjustments arising from historic Type 2 Medical Practitioner Self Assessment forms will be dealt with. The change is particularly relevant to salaried GPs and practices with outstanding historic Type 2 certificates.

What has changed?

For 2018/19 and earlier pension years, when a Type 2 certificate is submitted, PCSE will calculate the employee pension contributions due using the pensionable pay declared, the applicable contribution tier and any authorised leave recorded.

PCSE will then compare this with the contributions already paid, as declared on the certificate. Where this results in an underpayment or overpayment, the resulting adjustment will be settled directly with the GP, and their pension record will be updated.

Previously, the reconciliation of contributions was generally carried out between PCSE and the employing practice, with the GP often needing to work with their practice to reconcile their pension contribution position.

Which years are affected?

The revised approach currently applies to 2018/19 and earlier, with PCSE confirming that the qualifying year will move forward annually.

Practices should, however, be aware that this may not be the end of the reconciliation. As pension contributions collected during the year are based on estimated earnings, PCSE has advised that further adjustments with the practice may still be required to ensure the correct contributions have ultimately been paid in respect of the GP's employment.

What should you do?

If you are a GP with outstanding historic Type 2 certificates, or a practice dealing with an unexpected historic pension adjustment, it is important to understand how the adjustment has been calculated and whether there are any further implications for the practice.

Jo Benton | Assistant Manager in our Medical Team | Colchester, Essex