The warnings that changes to Clinical Excellence Awards (CEAs) were afoot have come true. A new local Clinical Excellence Award scheme is now in force and it affects the pay and pension of all NHS Consultants and academic GPs in England, as of the 1st April 2018.
How have Clinical Excellence Awards (CEA) changed?
In March this year, NHS Employers and the British Medical Association (BMA) agreed changes to the local Clinical Excellence Award (CEA) scheme. These changes were endorsed by the Department of Health and Social Care and came into effect as of the 1st April 2018.
Have your existing local CEA awards changed?
All local CEAs (Levels 1-8) awarded prior to the 1st April 2018 will remain, for the time being, pensionable.
They should be protected until March 2021 when they will be subject to a nationally agreed review process. That’s the review date given at the moment, although of course it could be brought forward at any time.
How have newly awarded local CEA awards changed?
Any local CEAs awarded after the 1st April 2018 are:
- Non-pensionable and non-consolidated
- Time limited i.e. payable for a maximum of 3 years
- Paid annually by lump sum.
The total number of awards has also increased.
Do the changes extend to national CEA awards?
In England & Wales, Levels 10-12 (Silver, Gold and Platinum hereafter) awards remain pensionable and consolidated¹, whether they are existing or newly awarded. As with local CEA awards, national CEA awards will be subject to a review in March 2021.
You cannot hold a local CEA award and a national CEA award. If national awards are withdrawn, most should revert to a local level award.
What happens if you lose a CEA award?
The answer to this simple question all depends on which section of the NHS Pension Scheme you are in, when you joined it, and under which scheme your lost CEA award was given.
If you are or were in the 1995 or 2008 section of the NHS Pension Scheme, you may be able to protect the value of your accrued final salary benefits in these schemes and safeguard your CEA award.
To do this, you must apply for ‘Protection of Pay’ within 3 months of going onto your reduced pay.
Reduced pension benefits
Some of your NHS pension benefits – such as death in service and ill-health – are based on your superannuated income. If you lose a CEA award, these benefits will go down.
The new local Clinical Excellence Awards scheme and your pension
The biggest impact the new local CEA scheme has on your pension relates to your annual pension allowance.
For NHS Pension Scheme members, how much you can contribute to your pension each year without incurring a tax charge is based on your deemed pension contribution figure.
In the past, getting a local CEA meant that your deemed pension contribution went up, particularly for those in the 1995 scheme.
Matters were further complicated if you got paid your CEA in the following tax year. It created an exacerbated artificial spike in your annual allowance growth which, in turn, likely pushed you over your annual pension allowance and resulted in an unwanted hefty tax bill.
Because any newly awarded local CEA is non-pensionable and unconsolidated, being awarded one now is unlikely to cause you any annual allowance issues. That is unless your annual allowance is tapered. Ongoing tax penalties for high earning medics >
What about national Clinical Excellence Awards and your pension?
You still have the issue of potentially breaching your annual pension allowance if you get awarded a national CEA.
Why? Because national CEAs are currently still pensionable and consolidated which means they can cause a sharp increase in your deemed pension contribution for the tax year they are paid.
The new local Clinical Excellence Awards scheme and your pay
Now that local CEAs are non-pensionable and non-consolidated, being awarded one means more of the money directly hits your bank account. Perhaps not such a bad thing in the current economic climate!
Having said that, you may need to spend that extra disposable income on paying for private death in service or ill-health cover which will not increase with your newly awarded local CEA.
Whether the new scheme incentivises innovation in the NHS or addresses the issue of unfairness or bias towards a few is not for me to comment on. I believe the general consensus for the changes was for reform…and that they certainly do when it comes to their impact on your finances!
If you want to find out how your pay and pension are affected under the new CEA scheme, speak to an NHS pension specialist IFA.
Do you think fewer Consultants and/or academic GPs will apply for a Clinical Excellence Award under the new scheme? Let us know by adding a comment below.
¹ Level 9 awards in England can be awarded locally as employer-based awards, or nationally as Bronze. In Wales, there are no local awards; commitment awards are made by employers instead.