How to check your net pensionable earnings (NPE) on the NHS portalon 13th May 2019
Have you checked your NPE? Mike Bryan explains how it all works.
Since a lot of principals will aim to complete their annual reconciliation forms in April or May each year, and with all associates being expected to check and accept or reject these calculations, we thought it would be useful to provide some basic guidance and some examples in respect of these calculations.
In accordance with the GDS requirements, providers are required to complete a net pensionable earnings (NPE) declaration annually. This enables the NHS Business Services Authority to ensure that correct contributions are paid into everyone’s pensions.
The superannuation deducted on behalf of performers each month is calculated on the actual payments (actual net income) made to each performer. This will initially be based on the performer’s allocated proportion of the contract. True net value may differ because during the year the contract value may have been re-distributed between performers to cover unexpected events, such as long-term sickness or underperformance. These have to be recorded on the Annual Reconciliation Report (ARR) declaration.
The calculation for NPE is now decided at a practice level. This means the principal can, within reason, make amendments to the generally accepted calculation. All performers should check their contract to ensure the calculation appears reasonable and in line with the terms agreed. Generally, NPE is calculated as your actual NHS income, ie your UDAs performed at your net UDA rate (perhaps £10), less lab bills, relating specifically to any NHS work performed.
NPE does not include seniority pay, long-term sickness pay, adoption leave pay, maternity and paternity pay, which have to be recorded on the declaration in separate boxes.
The maximum superannuable earnings within a practice is 43.9% of the total NHS contract value. So, if there is a contract in place of £200,000 then the maximum superannuable earnings available (for anyone to have) under that contract is 43.9% x £200,000 = £87,800.
An associate’s superannuable earnings are the amount they receive after lab bills and other deductions made in respect of the NHS work. Simply, an associate performing 5,000 UDAs at £10.00 per UDA and having £5,000 of NHS lab bills deducted from them would have an NPE of £45,000.
Both practices and associates alike may face some problems and complications when calculating the above.
- Not all lab fees recharged to an associate will relate to NHS work (some will be in respect of private patients) therefore a principal will need to identify the lab bills as either being in respect of NHS or private work. Generally this is not clear on associates’ pay schedules
- In the above example the principal (who lets say also does 5,000 UDAs and holds a contract for 10,000 UDAs at £20.00 per UDA) can only get £42,800 of superannuable earnings. This is because with a contract value of £200,000, the superannuation ‘ceiling’ is £87,800. Therefore, if the associate is getting £45,000 then this only leaves £42,800 available for the principal.
This also works in reverse, so principals can benefit from paying the associate under 43.9% of the practice’s UDA value (which generally will be in excess of £20.00 per UDA).
With point two you can see how a principal might be a little disgruntled at the fact that he/she is doing £100,000 NHS work but gets less superannuation than the associate. To address this, the principal would need to adjust the associates agreed pay rate or alter the NPE calculation at a practice level.
As an associate, you will be requested to accept or reject the principal’s NPE calculation within Compass. This is called the Annual Reconciliation Report (ARR) and needs approval by 30 June each year. As your NPE is the figure that is used by the NHS to calculate your superannuation contributions and the NHS contributions too (at 14.3% of your NPE) it is crucial this is checked yearly.
A dental specialist accountant should always be able to both explain and assist any associate or principal with their annual reconciliation and calculating both the provider’s and performer’s NPE.
If you have any queries or require further information please contact Mike Bryan on 01273 775814.