NHS General Dental Practitioners (GDS/PDS Providers and Performers

NHS General Dental Practitioners (GDS/PDS Providers and Performers A Guide to the NHS Pension Scheme (England & Wales) GDP Pensions Guide 03/2014 V3 1

Contents 1. The NHS Pension Scheme & Contacting NHS Pensions... 3 2. Roles and responsibilities... 5 3. Providers (Contractors) pensionable pay... 7 4. Performers (associates) pensionable pay... 9 5. Contributions... 12 6: Dental Body Corporate (DBC)... 14 7. Dentists who are not NHSPS members... 15 8. ARR (Annual Reconciliation Report)... 16 9. Frequently Asked Questions & Examples... 20 2. NHS Pension Scheme Membership... 20 GDP Pensions Guide 03/2014 V3 2

1. The NHS Pension Scheme & Contacting NHS Pensions The purpose of this Guide is to provide an overview of the NHS Pension Scheme (NHSPS) rules. A GDS or PDS dentist at a dental Practice falls into two categories: Provider Performer A Provider in NHS pension terms is a qualified dentist who is a partner, sole trader, or shareholder who holds a GDS/PDS contract. A Provider is also limited company or DBC that holds a GDS/PDS contract. Providers are sometimes referred to as Contractors. A Performer in NHS pension terms is a qualified dentist who works for a GDS/PDS Provider and are sometimes referred to as Associates. They may be self employed (including a locum) or employed. If they are working as a locum they must be paid directly by the Provider to be able to pension/superannuate their income. A Performer trading as a limited company cannot be in the NHSPS from 7 November 2011. There are currently two sections to the NHSPS; the 1995 section, and the 2008 section. GDS and PDS dentists NHS pensions are broadly based on their career NHS pensionable pay, not their final salary. NHSPS membership is subject to employee contributions being paid by the dentists and employer contributions paid by their Employing Authority; i.e. NHS England/NHSCB or LHB (Wales). Employer contributions are based on 14% of NHS pensionable pay. Employee contributions range from 5% to 14.5%. A GDS or PDS Practice is not, itself, a NHSPS Employing Authority. The statutory NHSPS Regulations can be downloaded at: http://www.nhsbsa.nhs.uk/pensions. The NHSPS offers: An annual (index linked) pension and tax-free lump sum at retirement. (A member of the 2008 section may elect for a lump sum by commuting some of their annual pension). Life Assurance benefits for a member s spouse/civil partner (or nominated partner) and dependent children in the event of the member s death. GDP Pensions Guide 03/2014 V3 3

There is a dedicated email address for GDS/PDS dentists and their representatives. nhsbsa.practitioners@nhs.net GDP Pensions Guide 03/2014 V3 4

2. Roles and responsibilities GDS/PDS Providers (Contractors), NHS England s local area teams, LHBs in Wales, Dental Services (Eastbourne), and NHS Pensions are all legally bound to administer the NHSPS in accordance with statutory pension legislation. A GDS/PDS Provider must, in law: State the estimated pensionable income for all the practice based dentists prior to the start of the pension s year. Liaise with NHS England/NHSCB or the LHB and Dental Services throughout the year in respect of any changes at the practice. Ensure that every dentist has access to the NHSPS unless they are ineligible or have opted out by completing (opt out) form SD502. Declare the NHS pensionable pay (or what would have been the pensionable pay) for every dentist immediately following year-end on the ARR (Annual Reconciliation Report). Ensure that NHS pensionable income is not assigned to another; this is illegal. Ensure that arrangements are in place for tiered employee contributions to be collected by Dental Services. Liaise with NHS England/NHSCB or the LHB and Dental Services where a claw back situation arises. NHS Pensions/ Dental Services are legally required to: Maintain records of NHSPS members and pensioners. Award pension benefits under the NHS Pension Scheme Regulations. Collect the employee and employer contributions. Provide estimates of benefits upon request. Pay transfer values in respect of a member transferring out of the NHSPS and receive payments for a member transferring into it. GDP Pensions Guide 03/2014 V3 5

Pay refunds of contributions to members where applicable. I.e. those with less than two years NHSPS membership. Process applications to purchase additional NHSPS benefits. Liaise with relevant parties where a claw back situation arises. GDP Pensions Guide 03/2014 V3 6

3. Providers (Contractors) pensionable pay The underlying principle is that the maximum pensionable pay of a GDS/PDS practice/ surgery is 43.9% of the total contract value; this is known as the pensionable earnings ceiling. This ceiling however excludes maternity, paternity and sick pay and the trainer grant. The Provider has a statutory duty to allocate the pensionable earnings ceiling amongst all the dentists working at the Practice. The net pay for all the pensionable and non-pensionable Performers is deducted at a first tranche from the Practice s 43.9% pensionable earnings ceiling. The remaining balance is the maximum allowable Provider s pensionable pay. If a Provider is a sole trader (practitioner) their GDS/PDS pensionable income is the remaining balance of the 43.9% ceiling. If a Provider is in a partnership the remaining balance will be allocated between the partners in accordance with the partnership agreement. If a Provider is a limited company/dbc the remaining balance is pensioned / superannuated by salaries and dividends paid to those who are NHSPS members in the pension s year up to 31 of March. If salary/dividends paid to the Provider are less than the available pensionable earnings ceiling the shortfall cannot be carried forward and pensioned in future years. A dentist cannot superannuate GDS/PDS income in respect of a colleague even if that colleague is not a member of the NHSPS. A Performer s NHS pensionable income must always be consistent with their net GDS/PDS income. Example: A (single-handed) GDS practice has a total contract value of 1,000,000.00; the pensionable earnings ceiling is 439,000.00. There are four Performers and their net GDS income is 80,000.00 each leaving the Provider (Contractor) with up to 119,000.00 to pension/ superannuate. If one of the four Performers is not a member of the NHSPS the Provider cannot assign the 80,000.00 to their own pensionable pay record. The Provider s pensionable pay remains as 119,000.00; the Provider cannot declare their pensionable pay as 199,000.00. A practice must notify the relevant organizations of GDS/PDS income that is non-pensionable for the purposes of calculating maternity pay, etc. GDP Pensions Guide 03/2014 V3 7

If the practice is a limited company, the Provider can only pension income that is paid to them by the company in the form of salary and dividends for that year. In the above example the Ltd Co Provider s pensionable income will be less than 119,000.00 if monies are held in reserve; i.e. not taken as pay and left in the business. GDS/PDS Provider must pension/superannuate all their eligible NHS income. If they are a shareholder they cannot pension/superannuate monies held in reserve. GDP Pensions Guide 03/2014 V3 8

4. Performers (associates) pensionable pay A Performer s NHS pensionable income is their net GDS/PDS income paid up to 31 March. For ARR purposes the Provider need only refer to the net GDS/PDS income paid to the Performer. A Performer cannot pension GDS/PDS income in respect of a colleague, nor can they pension/superannuate private income. The maximum total pensionable income that can be declared by a GDS/PDS practice is 43.9% of the total GDS/PDS contract value; this ceiling excludes maternity, paternity and sick pay and the trainer grant. The process for arriving at a Performer s net GDS/PDS is determined at practice level and any formula can be used. However once the net income is established that is also the Performer s pensionable pay except in exceptional circumstances; example three below refers. The pensionable pay for an employed Performer is their gross basic salary. The pensionable pay for a locum Performer is their net GDS/PDS income however they must be paid directly by the practice and not through a third party. Where the locum is engaged through an agency, or the practice subcontracts some of its GDS/PDS work to outsiders such as a DBC this cost needs to be identified and shown on the ARR but it is not pensionable. See examples 4 and 5 below. If a Performer joins the NHSPS however does not earn any GDS/PDS income their NHSPS membership will be postponed until they do. Examples 1 and 2 below are the norm; example 3 is exceptional. Example 1 Performer A has completed 6,000 UDAs in the year at an agreed value of 20.00 per UDA. Their practice agreement requires them to pay 10.00 per UDA as surgery contributions together with 50% of their lab fees, bad debts, statutory levy and a contribution to the hygienist. GDP Pensions Guide 03/2014 V3 9

Performer A s pensionable pay 6,000 UDAs @ 20 120,000.00 Less Surgery contribution 10 @ 6,000.00 60,000.00 50% lab charges 3,000.00 50% bad debts 350.00 50% statutory levy 50.00 Hygienist contribution 500.00 63,900.00 Performer A s net pensionable pay for the year is 56,100.00 ( 120,000.00 minus 63,900.00) Example 2 Performer B s agreement provides for a monthly salary based upon a target number of UDAs to be achieved with an annual adjustment for UDA actually achieved. For pensionable pay purposes, the calculations to arrive at the adjustment are not relevant. It is only the amount paid for GDS/PDS work completed in the pension year that is relevant. Salary 12 x 6,000.00 72,000.00 Year end adjustment paid for over performance 3,500.00 Total 75.500.00 Net amount paid being the Performer B s NHS pensionable pay for the year: 75,500.00 The year end adjustment may be paid after 31 March but must be related back to the pension year. Example 3 Occasionally a Performer s pensionable pay may be capped by virtue of the practice pensionable earnings ceiling. Practice total contract value 110,000.00 Practice pensionable earnings ceiling ( 110,000.00 x 43.9%) 48,290.00 Net amount paid to Performer C 50,000.00 GDP Pensions Guide 03/2014 V3 10

Performer C s pensionable pay is capped at 48,290.00 There is no scope for any other dentist to pension/superannuate income. Example 4 Performer D, an individual, fills a locum position to cover a short term illness of another Performer. Performer D is paid 250.00 a session covering ten sessions. Performer D s pensionable pay that must be declared on the ARR is 2,500.00 (10 x 250.00) Example 5 Performer E is engaged at the practice with payments made via an agency (or Performer E is subcontracted through a DBC). The payments made total 4,500.00. These payments must be declared on the ARR but are not pensionable. GDP Pensions Guide 03/2014 V3 11

5. Contributions Tiered Employee Contributions Dental Services will arrange for the appropriate employee tiered contributions rate to be collected from all the dentists through the practice. Tiered contribution rates range from 5% to 14.5% of pensionable income and are provisionally based on the dentist s estimated pensionable pay. If it transpires that the wrong rate has been applied it will be adjusted either during the year or at year end. Contribution rates are subject to change each scheme year and further information can be found on NHS Pensions website. If a dentist is a new starter (or leaver) their actual pensionable earnings are scaled to a full year (i.e. annualized) just for the purposes of setting the correct tiered rate. For example, if a dentist joins a GDS practice on 1 October 2012 (i.e. exactly six months into the pensions year) and their net GDS income (from 1 October 2012 to 31 March 2013) is 40,000.00 then their (hypothetical) annualised pay is 80,000.00 and their tiered rate is 9.9%. If a dentist is part time the tiered rate is based on their actual pensionable pay. It is not converted to a whole time equivalent value for the purposes of setting a tier. If it transpires that the wrong rate has been applied it will be adjusted either during the year or at year end. Additional Contributions Added Years contributions are paid as a fixed percentage of all pensionable NHS earnings and must be paid in every NHS pensionable post; contributions are collected by Dental Services. A NHSPS member may terminate their Added Years contract early and receive a proportional credit of additional membership purchased. Additional Pension contributions are paid as a fixed sum of money. The additional contributions are paid through one post only and are collected by Dental Services. Any additional contributions in respect of NHS Money Purchase AVCs (payable to Standard Life, Prudential, or Equitable Life) are collected by Dental Services. Any additional contributions in respect of Free Standing AVCs are payable directly to the relevant organisation by the dentist. GDP Pensions Guide 03/2014 V3 12

Employer Contributions Employer contributions are a fixed 14% and are collected off NHS England/NHSCB or the LHB by Dental Services every month. Once the ARR is completed Dental Services will collect any arrears or repay overpaid contributions. GDP Pensions Guide 03/2014 V3 13

6: Dental Body Corporate (DBC) A DBC is usually a company limited by shares which provides dental services. A DBC also has a special set of corporate governance rules controlling its operations. A DBC can hold a GDS Contract or PDS Agreement and is regarded as a Provider (i.e. Contractor) in NHS pension terms. A shareholder/director of a DBC who is a qualified dentist (and on the Performers List) is afforded type 1 dental Practitioner/Provider status under the NHSPS Regulations. A shareholder/director of a DBC who is not a qualified dentist is not eligible to join the NHSPS. The pensionable pay of a qualifying dentist shareholder/director is represented by salary and/or dividends paid to that dentist by the DBC in the pension year up to 31 March. A qualifying shareholder/director must pension, up to the available pensionable earnings ceiling, all salary and dividends paid. A dividend is treated as being paid on the date of a correctly convened, documented and recorded directors/shareholders meeting when the dividend is declared on, on an unconditional basis. Where a DBC holds several GDS Contracts/PDS Agreements it must complete a separate ARR for every practice. The accumulated remaining balance, if any, of the pensionable earnings ceiling in each practice is eligible as pensionable pay to the qualifying shareholders/directors using the dividend/salary route. A DBC often has mixed dental income; NHS and private. Where there is mixed income in a DBC there is no need to apportion salary/dividends between NHS and private income for NHSPS purposes. All salary/dividends paid, up to the pensionable earnings ceiling, are available for allocation as NHS pensionable income. A Performer working at the practice may operate through a DBC or as a limited company. However, from 7 November 2011 if they continue to operate through a DBC/limited company they cannot pension/superannuate their GDS/PDS income and are no longer a member of the NHSPS. This is because this sub-contracted DBC or limited company is not recognised under the statutory NHSPS Regulations. If the Performer wishes to regain membership of the NHSPS they must cease to operate through a DBC/limited company and take out a new contract as an individual. GDP Pensions Guide 03/2014 V3 14

7. Dentists who are not NHSPS members The Provider has a statutory responsibility to allocate the pensionable pay of the GDS/PDS practice amongst all of the dentists working there. It may be the case that a dentist working at the practice is not a member of NHSPS. This would arise when: The dentist has taken 24 hour retirement and returned The dentist has formally opted out of the NHSPS by completing form SD502 The dentist operates (i.e. trades) through a DBC/limited company from 07/11/2011 The dentist operates through a locum agency or is an external subcontractor. If a dentist, who is not a member of the NHSPS, works at the practice the Provider is required to: Identify the dentist Identify the amount of hypothetical (i.e. deemed) pensionable pay earned by that dentist Deduct this hypothetical pensionable pay from the Practice pensionable earnings ceiling. This identifies the new (revised) pensionable earnings ceiling that can be allocated by the Provider amongst the dentists at the practice who are members of the NHSPS. It is illegal for the (hypothetical) pensionable pay applicable to a dentist who is not a member of the NHSPS to be assigned to another. GDP Pensions Guide 03/2014 V3 15

8. ARR (Annual Reconciliation Report) Prior to the start of the NHS pensions year (April) every GDS/PDS practice is sent a form so that Dental Services can collect tiered employee contributions on account from the practice. This form must, in law, be completed and returned before 1 April. Dental Services will collect employer contributions from the PCT/LHB on account. A GDS/PDS practice must inform Dental Services of any dentists who are not NHSPS members as well as those who are. Every GDS/PDS practice is contractually required to liaise with NHS England/NHSCB, the LHB, or Dental Services throughout the year regarding any changes such as comings and goings. At the end of the pensions year Dental Services will send a partially completed ARR to the GDS/PDS practice. The Provider must, in law, complete the ARR in full and return it to Dental Services within three months; i.e. by the end of June. A Performer s pensionable pay will not be accepted until they ve had the opportunity to validate the figures. An ARR must be completed in respect of every practice that holds a GDS or PDS contract even where several practices are owned by the same organisation. This is because each practice has its own unique GDS/PDS contract and budget. The steps to be undertaken by the Provider (Contractor) to complete the ARR are as follows: 1. Identify the pensionable earnings ceiling of the practice. 2. Indentify the Performers at the practice who are not members of the NHSPS. 3. Identify the amount paid to every Performer at the practice for GDS/PDS work done in the pension year 1 April to 31 March. 4. In all cases deduct the pensionable pay of Performers from the pensionable earnings ceiling. The resulting balance is the pensionable pay of the Provider(s); sole trader or partnership. In the case of a DBC/Ltd Co the balance represents the maximum that can be pensioned using the dividend/salary route. (See worked example illustrating these principles). 5. Complete and return the ARR with the pensionable pay identified for all dentists at the practice. (If the provider is a DBC/Ltd Co identify the total amount paid to GDP Pensions Guide 03/2014 V3 16

shareholders/directors for dividends and/or salaries in the pension year 1 April to 31 March). The following worked example illustrates these principles. Worked Example for ARR completion 2012/13 The assumptions used are a GDS/PDS practice with a total contract value of 900,000.00; there are seven dentists. 1 full time Provider (Principal/Contractor) 6 Performers (Associates) as follows; Performer A is operating as a limited company Performer B has taken 24 hour retirement Performer C works six sessions a week Performer D operates as directly engaged locum Performer E operates as a locum engaged through an agency Performer F is operating as a salaried dentist Step 1 Identify the practice pensionable earnings ceiling:43.9% of total GDS/PDS contract value. 900,000.00 x 43.9% = 395,100.00 This is a ceiling which cannot be exceeded. Step 2 Identify the Performers at the practice who are not members of the NHSPS. In this case Performer A (who has continued to undertake GDS/PDS work through a DBC/ltd co after 07/11/2011), Performer B (who has taken 24 hour retirement as a member of the (1995) NHSPS), and Performer (E who works as a locum via an agency or is a external subcontractor). GDP Pensions Guide 03/2014 V3 17

Step 3 Identify the actual or hypothetical pay of every Performer at the practice; i.e. the net amount paid to the Performer for GDS/PDS work undertaken in the pension year ending 31 March. Performer A: 85,000.00 (limited company and therefore non-pensionable) Performer B: 75,500.00 (retired and therefore non-pensionable) Performer C: 56,100.00 (pensionable) Performer D: 2,500.00 (pensionable) Performer E: 4,500.00 (locum engaged through an agency and therefore non pensionable) Performer F: 70,000.00 (pensionable, pay is the gross NHS basic salary paid) Step 4 From the practice s pensionable earnings ceiling of 395,100.00 deduct the Performers pay who are not members of NHSPS Performer A 85,000.00 Performer B 75,500.00 Performer E 4,500.00 Total 165,000.00 New pensionable earnings ceiling is 230,100.00 ( 395,100.00 minus 165,000.00) Deduct the pensionable Performers pay Performer C 56,100.00 Performer D 2,500.00 Performer F 70,000.00 Total 128,600.00 The pensionable pay of the Provider is 101,500.00 ( 230,100.00 minus 128,600.00) (Had the Provider been a partnership the pensionable pay of 101,500.00 would be allocated amongst the partners in accordance with the partnership agreement. If any GDP Pensions Guide 03/2014 V3 18

of the partners were not NHSPS members their deemed pensionable income cannot be assigned to a pensionable partner. Had the Provider been a DBC the shareholders/directors who are members of the NHSPS could use dividends and salaries paid up to 101,500.00 as the basis for their pensionable pay. If dividends and salaries of less than 101,500 were paid then the shortfall cannot be carried forward to be pensioned in a later year. If dividends and salary in excess of 101,500 are paid, the surplus cannot count towards pensionable pay, as otherwise the ceiling would be exceeded). Step 5 Pensionable pay to be shown on ARR Principal 101,500.00 Performer A 85,000.00 (non-pensionable) Performer B 75,500.00 (non-pensionable) Performer C 56,100.00 Performer D 2,500.00 Performer E 4,500.00 (non-pensionable) Performer F 70,000.00 Practices pensionable earnings ceiling = 395,100.00 The actual or hypothetical pensionable pay for every dentist at the practice has to be determined and returned on the ARR. If a Performer or Provider is not a NHSPS member their GDS/PDS earnings may be needed for other purposes such as maternity or long term sickness pay. It is illegal for any dentist at the practice to pension the GDS/PDS income of a dentist (Provider or Performer) who is not a member of the NHSPS. GDP Pensions Guide 03/2014 V3 19

9. Frequently Asked Questions & Examples The FAQs are listed under separate headings for ease of reference. 1. NHS Pensionable Income & Tiered Contributions 2. NHS Pension Scheme Membership 3. NHS Pension Scheme Benefits 4. Limited Companies and DBCs 5. Added Years and the Additional Pension 6. Auto-enrolment 1. NHS Pensionable Income & Tiered Contributions Q. What is pensionable pay for a Provider (partner, shareholder, or singlehander)? A. It is basically their net income derived from the GDS/PDS contract after taking account of the NHS income of the other dentists and the 43.9% pensionable earnings ceiling. If a dentist is not a member of the NHSPS their GDS/PDS net income is still accounted for under the pensionable earnings ceiling. Q. How does a practice calculate its Performer (Associate) pensionable pay? A. It is their net GDS/PDS income up to 31 March as agreed at Practice level. The process (and formulae) for arriving at the net pay is decided at practice level. Once the net GDS/PDS income is arrived at it cannot be reduced further to arrive at a different pensionable pay figure unless the Performers pensionable income exceptionally exceeds the pensionable earnings ceiling as per example 3, Chapter 4. Q. Can a Performer pension income from one GDS/PDS practice but not in another? A. No. Practitioner NHSPS members must pension all their eligible NHS income. They cannot pick and mix. If however they work at Practice A as an individual and Practice B through a limited company they can only pension/superannuate their Practice A net income. Q. Can a partner, shareholder, or single hander assign their own pensionable income to their colleagues? GDP Pensions Guide 03/2014 V3 20

A. No. It is illegal to credit yourself with NHS (pensionable) income in respect of another. Q. Can a Performer assign pensionable income to them self in respect of a colleague? A. No. This is illegal. Q. Is private (non-nhs) income pensionable? A. No. Q. What is the pensionable earnings ceiling? A. The pensionable earnings ceiling is the maximum total amount of GDS/PDS income that a practice can declare as pensionable income and is 43.9% of the total contract value. This 43.9% - 56.1% ratio is set by the Department of Health. The ceiling is fixed however on occasion the total pensionable pay may exceed the ceiling by virtue of maternity pay, paternity pay, sick pay, or the trainer grant. Q. Can a partner, shareholder, or single-hander pension some, but not all, of their GDS/PDS income? A. No, they must pension all of their net GDS/PDS income after taking account of the income of others and the 43.9% ceiling. They cannot de-select income to avoid tax or going into a higher tiered contribution rate. If, however, the practice is a limited company/dbc the pensionable income is only what the dental shareholder is paid by the business. If they elect not to take some income (i.e. it is held in reserve) this is non-pensionable. Q. Can a practice use a standard percentage rate to calculate the Performers net income from the gross? A. It is not illegal to use a standard % figure (i.e. formulae) to arrive at the net so long as this method is agreed at practice level. It is basically up to the practice to decide as to how a Performer s net GDS/PDS income is arrived at. However once the net is arrived at it cannot be reduced further to arrive at a different pensionable pay figure. Q. Are UDAs or laboratory bills a direct factor in determining pensionable pay? A. Not directly but they play a part. If a Provider makes a margin on a Performer in respect of UDAs or laboratory bills that is an internal Practice arrangement. The GDP Pensions Guide 03/2014 V3 21

golden rule for Performers is that their agreed net GDS/PDS income (however it is arrived at) is the same as their NHS pensionable pay. Q. Is a dentist s pensionable pay for a specific pensions year what they were paid in that year (regardless of when the work was actually performed) or is it pay in respect of work performed in that year? A. The pensionable pay for year 2014/15, for example, should be in respect of the GDS/PDS work they performed from 1 April 2012 to 31 March 2013. There is, however, a degree of latitude/pragmatism especially where dental treatment spans a pensions year. Q. Is there still a NHSPS pensionable earnings cap? A. Since April 2008 there is no longer an earnings cap however there is still a virtual cap affecting those members who used to be capped and bought added years prior to April 2008; more information can be found in Newsletter 5/2011 on NHS Pensions website. There is no longer a Scheme MAR (Maximum Allowable Remuneration) or DEL (Dental Earnings Limit). Q. What are the rules regarding vocational trainees (VTs)? A. A practice based vocational trainee is regarded as a type 2 dental Practitioner in NHS pension terms. The trainer grant that is paid to the training dentist in a practice is 100% pensionable however because this grant does not form part of the total contract value it is not included within the 43.9% pensionable earning ceiling. Dental Services will superannuate the grant separately. The service costs (and other reimbursements) are non pensionable. Q. Are additional payments (i.e. in respect of performance or treating high treatment patients) pensionable? A. No. Any additional payments made to Providers will be paid as nonsuperannuable from 1 April 2013 with the exception of parental leave, sickness, seniority, and maternity and the trainer grant which are payments that are pensionable but not included in the calculation of the 43.9% pensionable earnings ceiling. Q. Does a GDS/PDS dentist qualify for deemed pensionable sick pay? A. If their pensionable pay reduces (or stops) for a lengthy period because of illness they can apply for deemed sick pensionable pay for up to 12 months by writing to NHS Pensions and providing evidence of absence. They do not receive any actual income; a deemed pay figure is credited to them. Deemed pensionable pay is not GDP Pensions Guide 03/2014 V3 22

declared on the ARR and can only be calculated some time after the dentist has returned to work. Q. Where is there information about recent tax changes affecting pensions? A. NHS Pensions website http://www.nhsbsa.nhs.uk/3126.aspx provides useful information. Q. What are tiered contributions? A. There are seven tiered rates. If the wrong tiered rate has been used Dental Services will make the necessary adjustments once the end of year ARR has been submitted. Please refer to NHS Pensions website for more information. Q. What happens if a practice underperforms? A. Where a practice underperforms by more than the allowable threshold the commissioner will claw back the underperformance. The pensionable earnings ceiling must be reviewed by virtue of the revised (lower) total contract value. A new ARR must be submitted. 2. NHS Pension Scheme Membership Q. Are all GDS/PDS dentists entitled to join the NHSPS? A. Yes. They are all NHSPS members unless they are ineligible or if they have opted out and are regarded as type 1 dental Practitioners. A GDS/PDS dentist must hold a National Insurance number and be registered with the GDC to be able to work in the UK. The National Insurance number must be included when submitting identification documents such as a birth certificate. Q. What happens if, through their own fault, a GDS/PDS dentist fails to pay their employee contributions in full? A. Their NHSPS membership is in effect suspended until they do pay in full. Q. What happens if nil (or zero) pensionable pay is declared for a GDS/PDS dentist? A. Their NHSPS membership will cease (i.e. close down) and NHSPS membership will be preserved up to normal pension age. Contributions must be paid to qualify for NHSPS membership. NHSPS membership will resume if contributions are paid again. As with all members, if NHSPS membership has been lost through GDP Pensions Guide 03/2014 V3 23

maladministration the dentist will have the opportunity to have this reinstated subject to contributions being paid. Q. What happens if a GDS/PDS dentist joins the NHSPS however it then transpires that they do not earn any GDS/PDS pensionable income? A. Their NHSPS membership will in effect be delayed until they do start earning GDS/PDS income and pay contributions. If this results in NHSPS membership commencing for the first time on or after 01/04/2008 the dentist will become a member of the 2008 section of the NHSPS. Q. What is meant by preserved? A. If a dentist ceases to pay contributions or opts out of the NHSPS prior to normal pension age their benefits are preserved (i.e. deferred) however are index linked in line with CPI. Q. Which section of the NHSPS applies to a NHS dentist? A. If a dentist joined the NHSPS for the first time on, or after, 1 April 2008 they will be a member of the 2008 section. If they joined before that date (and have not had a break of five years or more) they will be a member of the 1995 section. More information at http://www.nhsbsa.nhs.uk/pensions Q. What is the normal pension age? A. 60 in the 1995 section and 65 in the 2008 section. Q. What happens if a dentist has to finish work permanently by virtue of ill health? A. They should apply for the (in service) ill health pension before they finish work. To qualify NHS Pensions (and its medical advisors) must be satisfied that they are permanently incapable of performing their NHS duties (tier 1) or any type of work (tier 2). Q. What happens if a dentist leaves the practice and the PCT/LHB/NHSCB was not informed? A. This needs to be rectified immediately by liaising with Dental Services. Q. Are GDS/PDS locums entitled to join the NHSPS? GDP Pensions Guide 03/2014 V3 24

A. Yes. However the practice must regarded them as Performers (i.e. type 1 dental Practitioners) in NHS pension terms so long as they are not trading as a limited company. Q. Are vocational trainees employed by a GDS/PDS practice entitled to join the NHSPS? A. Yes; they are afforded type 2 dental Practitioner status which basically means they get the same pension rights as a Provider or Performer. Their salary is not part of the total contract value and they are not listed on the ARR. Q. Are GDS/PDS dentists engaged on a contract for services (i.e. self employed individuals) by a LHB entitled to join the NHSPS? A. Yes. They are afforded type 2 dental Practitioner status. 3. NHS Pension Scheme Benefits Q. How does a GDS/ PDS dentist claim their NHS pension? A. By contacting NHS Dental Services (based in Eastbourne) in the first instance. Q. Does a dentist have to retire from the practice to claim their pension? A. All Scheme members must retire for at least 24 hours to claim their NHS pension. A single-handed Provider must resign from their GDS/PDS contract. A Provider who is a partner must resign from the partnership; a shareholder must cease to be a company shareholder. A Performer must terminate their contract for service(s) for at least 24 hours. Q. How are GDS/PDS dentists NHS pensions calculated? A. Their NHS pension benefits are based on their total career (Practitioner) earnings; not their final salary. All NHS earnings are updated (dynamised) to a current day value in order to calculate the pension. Any salaried (Officer) service will be taken account of. The accrual rate in the 1995 section of the NHSPS is 1.4% of total dynamised income. The accrual rate in the 2008 section is 1.87%; there is no automatic lump sum in the 2008 section. Q. Can some of the annual NHS pension be given up to provide for a bigger lump sum? GDP Pensions Guide 03/2014 V3 25

A. Yes, this is available in both sections of the NHSPS up to a certain limit. Q. Does the NHSPS provide life assurance cover? A. Yes, this includes a death in service gratuity (for active/contributing NHSPS members) and dependents benefits. More information is available on NHS Pensions website. 4. Limited Companies and DBCs Q. Are dividends pensionable if the GDS/PDS Contractor is a limited company/dental body corporate? A. Any dividends are pensionable so long as they fall within the 43.9% ceiling. Where a limited company practice has mixed dental income (i.e. NHS and private) there is no need to apportion salary/dividends between NHS and private income for NHSPS purposes. All salary/dividends paid, up to the ceiling, are available for allocation as NHS pensionable income. Q. Where a GDS/PDS Provider is a limited company/dental body corporate what happens if the shareholders do not pay themselves all their GDS/PDS income? A. The pensionable income for the directors/shareholders (who are NHSPS members) is the amount of salary and dividends, up to the pensionable earnings ceiling that are paid to them in the year up to 31 March. If the amount paid falls short of the ceiling this shortfall cannot be carried forward and pensioned in later years. Each pension year is looked at in isolation. Q. What happens if a dentist is a shareholder in a company with many practices? A. They must complete an ARR in respect of every practice because each one is unique. Q. What happens if a Performer is working at a practice as a limited company? A. If they have incorporated they cannot be a member of the NHSPS from 07/11/2011. Q. What happens if a Performer is working at one practice as a limited company but at another as an individual? GDP Pensions Guide 03/2014 V3 26

A. They can only pension the income at the practice where they are working as an individual. Q. What happens if a GDS/PDS practice incorporates during the pensions year? A. The practice is still subject to the 43.9% ceiling for the whole year. 5. Added years and additional pension Q. How is the NHS additional pension purchased? A. It can be bought either in regular instalments or as a one off payment. Q. Are NHSPS added years contributions capped? A. There is still a virtual cap affecting those NHSPS members who used to be capped and bought added years prior to April 2008. The cap changes each year and is published on NHS Pensions website. The added years cap for 2013/14 was 141,000.00 and for 2014/15 is 145,800.00. Q. What happen if I have a break in NHSPS membership of more than 365 days? A. Your added year s contract will cease and you will be credited with service bought to date. 6. Auto enrolment Q. Are there any websites where I can I find out more about auto-enrolment? A. The websites of NHS Employers, The Pensions Regulator, and The Pensions Advisory Service provides more information. GDP Pensions Guide 03/2014 V3 27