Is your PCN company eligible for NHS Pensions?

Due to recent changes to the NHS pension scheme, you may no longer be eligible to offer access to the NHS pension for your team if you transferred to an incorporated company for your Primary Care Network (PCN). This is because some PCN companies are management organisations hosting ARRS (Additional Roles Reimbursement Scheme) and support teams for members’ practices, and are not providers of healthcare.

This will have a major impact on your team and is likely to damage both recruitment and retention.

Robert McCartney, associate in our primary care team, considers the key factors to determine if it applies to your PCN’s company, how this situation has arisen, and the actions you should consider taking if you are affected.

Management organisation or provider organisation?

Understanding the difference between these concepts is essential.

A management organisation, as defined by NHS England in response to the consultation on PCN access to the NHS Pension Scheme, refers to an organisation established by PCNs for the sole purpose of employing the PCN management team, administrators, ARRS staff, and other key personnel. These organisations are able to administer pensions for the PCN team and are structured as cost-sharing groups with member practices, enabling VAT exemption. This model is popular as it offers flexibility in allocating clinical teams whilst removing liabilities from partner practices.

Provider organisations are PCN companies established to take on responsibility for the provision of health services. These organisations not only host the ARRS team but also manage and oversee the provision of services. This model typically requires CQC registration and significant investments in clinical systems and governance. It is frequently used by PCNs who are managing enhanced access internally, as this provided the financial envelope to justify the investment.

The eligibility criteria will primarily affect management organisations, as the provider organisations should have qualifying PCN DES Sub-contracts. If they do not, these should be put in place immediately.

Change in eligibility

On 1 April 2023, the eligibility criteria for PCNs to access the NHS Pension changed. Previously, any PCN or organisation working on behalf of a PCN, including management organisations, had access to NHS pensions through the PCN Time Limited Determination (PCN TLD).

During the recent consultation on NHS Pension Access, the Department of Health and Social Care confirmed that the NHS Business Services Authority (NHSBSA) would offer permanent access for PCNs to the pension scheme.

However, they identified that management organisations posed a specific issue due to their lack of qualifying contracts for normal access and their indirect association with member practices. As a result, the following extension of temporary access arrangements was proposed:

“…Many primary care organisations who use management organisations have been given time-limited access to 31 March 2023. NHS England argue that allowing this access to expire could cause service delivery and continuity issues, and hinder the ability to recruit staff. They suggest an extension of temporary access arrangements to permit time for NHS England, the department and the scheme administrator to consider how access could be provided on a permanent basis.”

The response from the Department confirmed that this scenario had been addressed:

“The department is also grateful to NHS England and the scheme administrator for their suggestion of a wider qualifying subcontract of GMS, PMS and APMS services which would provide independent provider access to management organisations set up to perform management and administration functions on behalf of GP practices.

It is clear that allowing current temporary access arrangements for these organisations to expire would present a risk to recruitment and retention, and ongoing service delivery. On this basis, the department will extend current direction and/or determination access for management organisations to 31 March 2024. This will allow time for a further review of access arrangements for these organisations, and for NHS England to propose a qualifying subcontract to cover them.”

However, contradictory information arises from the Revised NHS Pension Scheme access requirements: Guidance for employers published in April, as it does not mention the extension of access to management organisations established as Employing Authorities under the original PCN TLD, putting access to NHS pensions at risk.

Furthermore, the guidance fails to provide a clear route of access for new management organisations that have not yet started employing individuals. There is also no reference to the ‘wider qualifying subcontract’.

To compound the issue, the guidance states that:

[Independent Provider Employing Authorities] that also have access for ARRS / DES employees via a PCN TLD will not be able to use the TLD EA code after 31/03/2023.

and

Existing employers, with PCN TLD access expiring on 31/03/2023, need to complete an application if continued access is required. When approved for Open PCN Determination access the existing EA code will be retained.

It is therefore necessary for all PCN companies to reapply for eligibility to the NHS Pension. There are two routes available: Independent Provider or Open PCN Determination access. Both of these require the PCN to submit a PCN DES Sub-contract. Managing organisations will not have a PCN DES Sub-contract as they are not and do not want to be direct providers of health services.

This discrepancy between the consultation response and the application by NHSBSA may be an oversight, but until resolved, it poses a risk to the ability of many PCN companies to offer NHS pensions.

Actions to take now

If your PCN company had NHS Employing Authority status before 1st April 2023 under the PCN TDL, or planned on applying for it, there is a possibility that your company is no longer eligible for NHS pensions until this situation is rectified. This is a serious problem but it is important not to take any drastic action until you have completed an appropriate assessment of the risk.

It is likely that this has been caused by a timing issue between NHS England and NHSBSA. There is no suggestion that the conclusions of the Consultation are not to be implemented at this time, so it is crucial to take appropriate actions to mitigate the issue while waiting for further clarity. Here are the recommended steps:

Contact NHSBSA

Reach out to NHSBSA to clarify whether your Employing Authority status remains valid or if you need to submit a new application.

Assess the extent of risk

Identify the affected team members and determine the extent of the risk. Your accountants and/or pension advisors may be able to assist with this process.

Start allocating reserves

Begin allocating reserves to a contingency fund to mitigate any identified risks.

Consider transitioning to a provider organisation

Consider whether transitioning to a provider organisation is a viable option for your PCN company.

Seek professional advice

If you are willing to transition, obtain advice from experts on managing this process, including timeframes and appropriate actions to take.

Seek legal and accounting support

If transitioning is not feasible, seek urgent legal and accounting support to develop an action plan to mitigate the issue while awaiting further clarity from NHSBSA.

Official Response

We have contacted NHSBSA, NHS England, and the Department of Health about this conflicting guidance.

As a result of our enquiry for clarification, NHSBSA has suggested that the PCN DES Sub-contract may be suitable if the specifications are appropriately drafted. This would require careful consideration as to whether the PCN DES Sub-contract has suitable terms and conditions to manage the relationship between the organisation and the PCN’s member practices. The extent to which this contract covers clinical services will also need to be assessed.

Please contact us for further updates.