The National Health Service Pension Scheme Regulations 2015

PART 8 Independent providers

Interpretation

150.—(1) This regulation applies for the purposes of this Part.

(2) An independent provider is a person that employs an individual under a contract of employment and—

(a) is not otherwise an employing authority in respect of the individual;

(b) is a party to a qualifying contract;

(c) has been granted employing authority status for the purposes of this scheme.

(3) A qualifying contract is a contract between a relevant commissioning party and another person the primary purpose of which is the provision of clinical health care services for the NHS and which is—

(a) an NHS standard contract;

(b) an APMS contract; or

(c) a contract entered into by a local authority pursuant to its functions under the 2006 Act which—

(i) relates to the improvement and protection of public health; and

(ii) the scheme manager agrees to treat as a qualifying contract for the purposes of these Regulations.

(4) The wholly or mainly condition requires an employee performing services pursuant to a qualifying contract to do so for more than 50% of the employee’s time in the employment.

(5) In determining whether the wholly or mainly condition is met regard must be had to—

(a) each scheme year; or

(b) if the service starts or finishes during a scheme year, so much of the year in which the services are performed.

(6) The 75% threshold is 75% of the total gross amounts payable in a scheme year to an independent provider by the commissioning party in respect of a qualifying contract between them.

(7) A commissioning party is a person who commissions services under a qualifying contract.

(8) In this Part—

“closed approval” must be construed in accordance with regulation 151(4);

“IP guarantee” must be construed in accordance with regulation 154;

“NHS standard contract” means the terms and conditions from time to time drafted by the National Health Service Commissioning Board pursuant to regulation 17 of the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) Regulations 2012(1);

“open approval” must be construed in accordance with regulation 151(5);

“required level of cover” means a sum equal to 110% of 3/12ths of a reasonable estimate of the independent provider’s total annual contribution liability arising under regulations 30, 33 to 35, 48 and 57 in respect of the qualifying contract in respect of which it was granted employing authority status.

Application for employing authority status

151.—(1) This regulation applies to a person (the applicant) who—

(a) employs an individual under a contract of employment (the employee);

(b) is not an employing authority in respect of the individual; and

(c) is a party to a qualifying contract in respect of which the employee performs services.

(2) The applicant may apply to be granted the status of an employing authority in respect of the qualifying contract.

(3) An application must—

(a) be in writing;

(b) be in such form as the scheme manager requires;

(c) contain a declaration that, at the date of the application, the employee satisfies the wholly or mainly condition;

(d) contain an undertaking that a person who on or after the relevant date is engaged to perform services pursuant to the qualifying contract will do so in a way that satisfies the wholly or mainly condition;

(e) contain a declaration that the applicant is not already an employing authority in respect of a person mentioned in sub-paragraph (c) or (d);

(f) state whether the application is made on a closed approval or open approval basis;

(g) provide an estimate for the scheme year in respect of which employment authority status (if granted) would take account of—

(i) the gross sums the applicant anticipates receiving from the commissioning party in respect of the services it is to provide under each qualifying contract to which it is a party;

(ii) the number of employees who will be engaged in performing such services and who will satisfy the wholly or mainly condition;

(iii) the total pensionable earnings of those employees;

(iv) the total amount of members contributions payable by those employees pursuant to regulation 30 (by reference to the pensionable earnings bands into which they fall), 48 or 57;

(v) the total amount of employing authority contributions payable in respect of those employees pursuant to regulation 33, 34, 35, 48 or 57;

(vi) the total number of employees who would satisfy the wholly or mainly condition and who are engaged in performing services pursuant to each such contract but who are otherwise not eligible to be members of this scheme;

(vii) the total estimated earnings of the employees referred to in paragraph (vi).

(4) A closed approval basis relates to an employee—

(a) who is not otherwise covered by—

(i) a direction under section 7 of the Superannuation (Miscellaneous Provisions) Act 1967(2); or

(ii) a determination under section 25(5) of the 2013 Act; and

(b) who was, within the 12 months preceding the start of the employment contract with the applicant, in an employment in which the employee was entitled to participate in—

(i) superannuation benefits provided under section 10 of the Superannuation Act 1972(3) whether or not the employee had been a member of such a scheme pursuant to that entitlement; or

(ii) benefits provided under sections 1(2)(e) and 3 of the 2013 Act whether or not the employee had been a member of such a scheme pursuant to that entitlement.

(5) An open approval basis relates to an employee performing services pursuant to a qualifying contract—

(a) who satisfies the wholly or mainly condition;

(b) regardless of whether the employee is within paragraph (4).

Grant of employing authority status

152.—(1) The scheme manager may grant employment authority status on an application under regulation 151 if—

(a) satisfied as to the matters in paragraph (3) of that regulation; and

(b) where an IP guarantee is required, the guarantee has been provided to the scheme manager.

(2) Employing authority status takes effect—

(a) on the date it is granted; or

(b) if later, on such date as the applicant specifies in the application.

Extension of employing authority status

153.—(1) Paragraph (2) applies if an independent provider is or subsequently becomes a party to a qualifying contract which is not the qualifying contract in respect of which employing authority status was granted (a further contract).

(2) The independent provider’s employing authority status extends to the further contract with effect from—

(a) if the independent provider was a party to the further contract at the date employing authority status was granted, that date;

(b) in any other case, the date on which the further contract is entered into.

(3) Paragraph (4) applies if an independent provider is associated with another employer (the associated employer) who is a party to a qualifying contract.

(4) The independent provider’s status as an employing authority extends to a qualifying contract to which the associated employer is a party.

(5) The extension of employing authority status by virtue of paragraph (4) takes effect—

(a) if the associated employer is a party to the qualifying contract mentioned in paragraph (4) at the date the independent provider is granted employing authority status, on that date;

(b) in any other case, on the date the associated employer enters into the qualifying contract.

(6) For the purposes of paragraph (3) an independent provider is associated with another employer if the independent provider—

(a) exercises direct control over the other employer’s affairs; or

(b) is entitled to acquire direct or indirect control over those affairs.

(7) Paragraph (8) applies if, in consequence of paragraph (2) or (4) the independent provider’s estimated contribution liability under regulations 30, 33 to 35, 48 and 57 increases by 10% or more on the date specified in paragraph (2) or (5), as the case may be.

(8) The scheme manager may require the independent provider to take any of the following steps—

(a) increase the sum already guaranteed by an IP guarantee;

(b) provide such further IP guarantees in respect of the amount of the increase in the estimated contribution liability as the scheme manager thinks appropriate;

(c) if the independent provider has not already provided an IP guarantee, provide an IP guarantee for the total amount of estimated contribution liability in relation to all qualifying contracts in respect of which the independent provider has employing authority status.

IP guarantees

154.—(1) An IP guarantee is a guarantee by an independent provider which—

(a) is in such form as the scheme manager approves;

(b) guarantees payment to the scheme manager of the required level of cover;

(c) is underwritten by one or more bodies approved of by the scheme manager;

(d) takes effect on the date the independent provider is granted employing authority status for the purposes of this Part.

(2) The scheme manager may, as a condition of granting employing authority status to an independent provider, require the independent provider to provide an IP guarantee.

(3) The scheme manager may at any other time require an independent provider to provide an IP guarantee and may do so in particular—

(a) if an independent provider fails to meet any of its liabilities under these Regulations as an employing authority;

(b) if, before it was granted employing authority status under this Part, failed in any other capacity to meet such liabilities;

(c) if the scheme manager has reasonable grounds to believe that the independent provider is unable, or is likely to become unable, to meet such liabilities.

(4) The scheme manager may in exceptional cases specify additional requirements for an IP guarantee.

(5) An independent provider must review each IP guarantee currently having effect—

(a) not later than one month before the start of a scheme year;

(b) not later than one month after the date on which employing authority status was granted;

(c) not later than one month before the date on which the guarantee is expressed to cease to have effect (if that is not the start of a scheme year);

(d) if it becomes a party to another qualifying contract;

(e) immediately it reasonably believes that its estimated contribution liability under regulation 30, 33, 34, 35, 48 or 57 has increased or may increase by more than 10%;

(f) on being notified in writing by the scheme manager that the scheme manager considers that the sum guaranteed by the guarantee does not equal or exceed the required level of cover.

(6) Paragraph (7) applies if—

(a) paragraph (5)(e) applies; and

(b) the independent provider determines that the amount of cover provided by the IP guarantee or IP guarantees currently having effect is less than the total required level of cover in respect of all of its qualifying contracts.

(7) The independent provider must before the end of the period of 14 days starting with the determination—

(a) increase the amount of cover its IP guarantee or guarantees so as to at least equal the total required level of cover; or

(b) take out an additional IP guarantee or guarantees for such amount or amounts as will secure that the total required level of cover is effected.

(8) The independent provider must before the end of the period mentioned in paragraph (7) notify the scheme manager of the action taken under that paragraph.

(9) Paragraph (10) applies if—

(a) paragraph (5)(f) applies; and

(b) the independent provider determines that the amount of cover provided by the IP guarantee or IP guarantees currently having effect is not less than the total required level of cover in respect of all of its qualifying contracts.

(10) The independent provider must—

(a) before the end of the period of 14 days after the determination notify the scheme manager of the determination; and

(b) provide the scheme manager with such information as the scheme manager may from time to time require in relation to the extent to which its IP guarantee or guarantees are sufficient to meet the required level of cover.

75% threshold and contribution surcharge

155.—(1) An independent provider must not in any scheme year exceed the 75% threshold for the aggregate amount of pensionable earnings paid to members of this scheme in respect of the performance of services under all qualifying contracts in relation to which the independent provider is an employing authority.

(2) If an independent provider fails to comply with paragraph (1), the independent provider must pay to the scheme manager a surcharge (the employer contribution surcharge) of 12% of—

(a) the amount by which the 75% threshold is exceeded; or

(b) if paragraph (3) applies such part of the excess as the scheme manager considers reasonable having regard to the declared NHS income, profits, losses and expenses for the scheme year in question.

(3) This paragraph applies if the scheme manager is satisfied that there is a reasonable explanation for the threshold having been exceeded.

(4) Where paragraph (3) applies, the scheme manager may, at any time—

(a) reduce the amount of the excess in respect of which the employer contribution surcharge is to be paid; or

(b) determine that no surcharge is to be paid.

(5) An employer contribution surcharge must be paid to the scheme manager before the end of the period of one month (or in exceptional circumstances such other period as the scheme manager decides) starting with the date on which the scheme manager gives notice to an independent provider that the surcharge is payable.

(6) If an independent provider fails to pay an employer contribution surcharge on or before the time required by paragraph (5)—

(a) there is a chargeable event for the purposes of regulation 36;

(b) paragraphs (2) to (8) of that regulation apply as if the surcharge were contributions payable by an employing authority.

(7) The failure of an independent provider to comply with paragraph (1) does not affect—

(a) the amount of pensionable earnings a person who is member of this scheme by virtue of regulation 18(1)(c) is entitled to count for the purposes of these Regulations; or

(b) entitlement to or the amount of benefits payable under this scheme.

Default notice

156.—(1) This regulation applies if the scheme manager gives an independent provider a notice under regulation 36(4) (non-payment of contributions) in respect of contributions payable in connection with a qualifying contract.

(2) The scheme manager must—

(a) also give a copy of the notice to the commissioning party to the qualifying contract;

(b) at the same time as the notice under regulation 36(4), give the independent provider notice that continued non-payment of the contributions will result in termination of employing authority status with effect from the day following the end of the second month after the month for which the contributions are due.

(3) If, one month after the issue of a notice under paragraph (1), some or all of the contributions referred to in that paragraph remain unpaid, the scheme manager must—

(a) notify the commissioning party of the non-payment specifying—

(i) the period or periods for which contributions are outstanding; and

(ii) the amount or amounts outstanding; and

(b) request the commissioning party—

(i) to consider withholding from any payments it is due to make to the independent provider in relation to any qualifying contract, an amount equal to the amount of unpaid contributions; and

(ii) to pay that amount to the scheme manager.

(4) If the scheme manager receives an amount pursuant to paragraph (3)(b)(ii), the scheme manager must—

(a) give the commissioning party a written receipt for the payment;

(b) notify the independent provider in writing that a sum equal to the amount of the unpaid contributions has been—

(i) withheld pursuant to paragraph (3)(b)(i); and

(ii) paid to the scheme manager by the commissioning party pursuant to paragraph (3)(b)(ii).

Pension returns

157.—(1) An independent provider must provide the scheme manager with the information specified in paragraph (4) in respect of the relevant period.

(2) The information must be provided—

(a) in writing and in such form as the scheme manager from time to time requires;

(b) not more than two months after the end of a scheme year; and

(c) not more than two months after the date when the independent provider ceases to be an employing authority for the purposes of this scheme if that does not occur at the end of a scheme year.

(3) The relevant period is—

(a) for the purposes of paragraph (2)(b), the complete scheme year in respect of which the information is provided;

(b) for the purposes of paragraph (2)(c), the period beginning with the start of the scheme year in which the cessation occurs and ending with the date of the cessation.

(4) The information is—

(a) a complete list of all qualifying contracts to which the independent provider is a party at any time during the relevant period;

(b) the total gross amounts—

(i) estimated in accordance with regulation 151(3) to be payable during the relevant period under those contracts to the independent provider by the commissioning party;

(ii) actually received by the independent provider from the commissioning party during the relevant period;

(c) whether the independent provider’s status as an employing authority was granted on an open or closed approval basis;

(d) whether the approval status has changed and, if so, when;

(e) where the scheme manager has required an IP guarantee, the amount guaranteed;

(f) the number of employees who were engaged in performing services pursuant to a qualifying contract who satisfy the wholly or mainly condition;

(g) the total pensionable earnings of those employees;

(h) the total employee contributions payable by those employees pursuant to regulations 30 (by reference to the pensionable earnings bands into which they fall), 48 and 57;

(i) the total amount of employing authority contributions payable in respect of those employees pursuant to regulation 33, 34, 35, 48 or 57;

(j) confirmation that those of its employees who were or became members of this scheme during the relevant period satisfied the wholly or mainly condition throughout the period;

(k) the total number of employees who—

(i) satisfied the wholly or mainly condition and were engaged in performing services pursuant to a qualifying contract; but

(ii) were otherwise not eligible to be members of this scheme.

(l) the total amount of pensionable earnings of employees who satisfied the wholly or mainly condition expressed as a percentage of the total gross amounts payable to the independent provider by a commissioning party in respect of all of its qualifying contracts;

(m) where the percentage referred to in sub-paragraph (l) exceeds 75%, an explanation for that percentage having been exceeded;

(n) whether the independent provider has ceased to be a party to a qualifying contract;

(o) whether the independent provider no longer has any employees who satisfy the wholly or mainly condition.

(5) Paragraph (6) applies if an employee of an independent provider—

(a) is a member of this scheme by virtue of regulation 18(1)(c); and

(b) ceases to satisfy the wholly or mainly condition or any other condition of membership of this scheme.

(6) The independent provider must—

(a) inform the employee that the employee’s membership of this scheme is terminated on the date the employee ceased to satisfy the condition;

(b) notify that fact to the scheme manager by notice in writing.

Provision of information

158.—(1) This regulation applies for the purposes of enabling the scheme manager to assess whether the grant of employing authority status to an independent provider should continue to have effect.

(2) The scheme manager may at any time require the independent provider to provide information which the scheme manager thinks relevant relating to—

(a) those employed by the independent provider who have become members of this scheme by virtue of regulation 18(1)(c);

(b) the qualifying contracts in respect of which employing authority status was granted or extended;

(c) the numbers of persons engaged in performing services pursuant to the contracts and the proportion of their time spent doing so.

(3) The information must be provided not later than 14 days after the date it is requested.

(4) The scheme manager may by notice in writing require the independent provider to provide such other information as the scheme manager thinks necessary to determine whether there has been compliance with these Regulations.

(5) Information required under paragraph (4) must be provided within the time specified in the notice.

Termination of employing authority status

159.—(1) The scheme manager must terminate an independent provider’s status as an employing authority in respect of a qualifying contract if the independent provider ceases to be a party to the contract.

(2) The scheme manager may terminate an independent provider’s status as an employing authority in respect of a qualifying contract in any of the following circumstances—

(a) if the independent provider subsequently acquires the status of an employing authority by virtue of being listed in Schedule 5 (ignoring paragraph 5 of that Schedule);

(b) if all of the employees of the independent provider who acquired membership of the scheme by virtue of regulation 18(1)(c) cease to satisfy the wholly or mainly condition;

(c) if the independent provider—

(i) fails to review, in accordance with regulation 154(5), the amount of cover guaranteed by its IP guarantee; or

(ii) having carried out the review fails to increase the amount of cover provided by the IP guarantee where such an increase is required;

(d) if, following the issue of a notice under regulation 156, the independent provider fails to pay to the scheme manager the amount specified in paragraph (1) of that regulation in the time so specified;

(e) if paragraph (7) of regulation 154 applies and the independent provider fails to act as required by that paragraph;

(f) if the independent provider fails to provide information required by regulation 158(2) or (4);

(g) if the scheme manager is not satisfied that the information provided by the independent provider pursuant to regulation 158(2) supports the continuation of its status as an employing authority;

(h) if the independent provider fails to notify the scheme manager that a guarantor of any of its IP guarantees has withdrawn or revoked its guarantee;

(i) if the independent provider has in any three years in a five year period exceeded the 75% threshold or has a pattern of doing so.

(3) If the scheme manager decides that the independent provider’s status as an employing authority in respect of a qualifying contract is to be terminated, the scheme manager must, as soon as reasonable practicable, give the independent provider notice of—

(a) the termination; and

(b) the date on which it takes effect.

(4) If an independent provider’s status as an employing authority is terminated, its employees who are or were eligible to be members of this scheme cease to be members or be eligible to be members on the date of termination.

Withdrawal from employing authority status in this scheme

160.—(1) An independent provider may withdraw from employing authority status in this scheme in accordance with this regulation.

(2) The independent provider must give notice to the scheme manager (a withdrawal notice) that it intends to cease to be an independent provider for the purposes of these Regulations with effect from the date specified in the notice (the withdrawal date).

(3) A withdrawal notice that affects a person who has become a member of this scheme by virtue of regulation 18(1)(c) must not be given unless the person gives consent in writing to the independent provider.

(4) The withdrawal date must not be earlier than the end of the period of six months starting with the date of the withdrawal notice (the withdrawal period).

(5) A withdrawal notice must—

(a) be in writing; and

(b) be accompanied by evidence of the consent required under paragraph (3).

(6) A withdrawal notice has effect in respect of every qualifying contract to which the independent provider is a party.

(7) With effect from the withdrawal date, a person who is a member of this scheme by virtue of regulation 18(1)(c) ceases to be such a member.

Change from open approval to closed approval basis

161.—(1) If the employing authority status of an independent provider was granted on an open approval basis, the independent provider may give the scheme manager a modification notice stating that it wishes its status as an employing authority to cease to be on that basis but to continue instead on a closed approval basis.

(2) A modification notice given in respect of one or more qualifying contracts is effective in respect of all qualifying contracts.

(3) A modification notice must—

(a) be in writing;

(b) specify a date on which the modification is to take effect (“the operative modification date”): that date cannot fall within the period of 6 months commencing with the date of the modification notice (“the modification period”);

(c) be accompanied by the written consent of any affected person who has consented to the giving of that notice: for these purposes an “affected person” is any person who became a member of this scheme by virtue of regulation 18(1)(c).

(4) On the operative modification date—

(a) the basis of the independent provider’s approval changes from an open to a closed approval basis;

(b) any affected person who gave consent to the giving of the modification notice ceases to be a member of this scheme;

(c) any affected person who did not give such consent remains a member of this scheme.

(5) A person who is, but for a modification notice, otherwise entitled to participate in this scheme during the modification period by virtue of the independent provider having been granted approval on an open approval basis, continues to be so entitled but only for the duration of that period.

(6) Nothing in paragraph (5) prevents a person referred to in that paragraph from becoming a member of this scheme by virtue of their employment with some other employing authority.

(7) During the modification period, a person who was eligible to become a member of this scheme in accordance with regulation 18(1)(c) but who did not do so by virtue of opting out in accordance with paragraph 1 of Schedule 4, may, in accordance with paragraph 2 of that Schedule, join or re-join this scheme.

Change from closed approval basis to open approval basis

162.—(1) An independent provider granted employing authority status on a closed approval basis when it first applied for approval may give the scheme manager a modification notice stating that it wishes its status as an employing authority to cease to be on that basis but to continue instead on an open approval basis.

(2) An independent provider that has previously modified its participation in this scheme may give the scheme a further modification notice stating that it wishes its status as an employing authority to cease to be on a closed approval basis but to continue instead on an open approval basis.

(3) An application referred to in paragraphs (1) and (2) must specify—

(a) the date (“the modification date”) from which the change to open approval is sought: the modification date must not be less than 3 months from the date the application is received by the scheme manager;

(b) that approval on an open approval basis is sought in respect of all employees of the independent provider engaged to perform services pursuant to a qualifying contract at the modification date provided always that such persons satisfy the wholly or mainly condition and regardless of whether they were so engaged at the date of any earlier approval.

(4) Where the scheme manager is satisfied that the independent provider will, at the modification date, satisfy the matters set out in regulation 151, the change to open approval basis is to take effect from that date.

(1)

S.I. 2012/2996.

(2)

Section 7 has been amended by sections 10(5) and 29(1) and (4) of, and paragraphs 66 of Schedule 6 and Schedule 8 to, the Superannuation Act 1972 (c.11), section 57 of, and Schedule 5 to, the National Health Service Reorganisation Act 1973 (c.32), section 109 of, and paragraph 24 of Schedule 16 to, the National Health Service (Scotland) Act 1978 (c.29) and section 2 of, and paragraphs 28 and 29 of Schedule 1 to, the National Health Service (Consequential Provisions) Act 2006 (c.43).

(3)

1972 c.11. Section 10 has been amended by sections 4(2) and 8(5) and (6) of the Pensions (Miscellaneous Provisions) Act 1990 (c.7), section 190 of, and paragraph 7 of Schedule 8 to, the Pension Schemes Act 1993 (c.48), section 27 of, and paragraphs 6 and 10 of Schedule 8 to, the Public Service Pensions Act 2013 (c.25) and article 108 of S.I. 2001/3649.