The results are in. In October last year, the Department of Health and Social Care (DHSC) opened a consultation on its amendments to the NHS Pension Scheme regulations, planned for April 2024.
The DHSC has assured members that in making the changes, their primary considerations have been to protect the lower paid, minimise the risk of opt-outs and ensure the scheme remains sustainable and affordable for all members.
Here’s a brief summary of what will be implemented from 1 April 2024.
- The member contribution structure will be reduced to 6-tiers
- Member contribution tiers will rise automatically each year, in line with inflation. (This will be taken from the Consumer Price Index (CPI) figure from the previous September.)
- If the annual Agenda for Change pay award for England is above inflation, the contribution tiers will be increased accordingly, to minimise the risk of members being pushed into higher contribution rates.
- From 1 April 2024, neither method will increase the first tier and entry to the second tier.
- There will be a period of further consultation on “the detailed requirements and implications” of real-time re-banding, with a view to bringing this in from April 2025. This will allow time for payroll systems to gear up for the changes.
Many members will continue to pay at the same rate, and others will pay less. Some, of course, will pay higher contributions after 1 April 2024, but the increase will be capped at 0.8%, so payments will rise by a negligible amount.
The new member contribution structure from 1 April 2024, after CPI uplift (September 2023 6.7 %) will be as follows:
| Pension salary range | Contribution rates from 1 April 2024, based on actual annual pensionable pay |
| Up to £13,259 | 5.2% |
| £13,260 to £26,831 | 6.5% |
| £26,832 to £32,691 | 8.3% |
| £32,692 to £49,078 | 9.8% |
| £49,079 to £62,924 | 10.7% |
| £62,925 and above | 12.5% |
It should be noted, however, that although the Employers rate is going up, GP practices will carry on paying at the 14.38% rate, as the increase will be covered directly by NHS England.
Other changes will include:
- In the 2015 Scheme, overtime for part-time staff will be pensionable up to 37.5 hours per week (unless partial retirement has been taken in the last 12 months). This brings it into line with the 1995 and 2018 Scheme regulations.
- The employer contribution rate will rise from 20.6 % to 23.7 %, plus the existing 0.08 % Scheme Administration Charge. For most employers, this 3.1% increase will be met centrally. There will also be a 2.64% rise in funding for Medical schools, to be reviewed in the next spending review.
- The abatement for special class status (SCS) members is to be permanently removed.
- Members taking unpaid carer’s leave will be treated as having continued in pensionable service during their period of absence. Members will pay any contributions they owe when they return to work.
- Lifetime Allowance references will be removed, dependent on the Finance Act. These are essential changes to ensure existing partial retirement provisions continue to work as intended, and a new category of lump sum can now be drawn from the NHS AVC schemes.
- From 1 April 2024 those subject to maximum service limits will be able to take partial retirement.
- Salary sacrifice arrangements will no longer be an eligible means to secure a 10% reduction in pensionable pay for partial retirement eligibility.
There were some proposals that DHSC will not take forward. The first is that they won’t be removing the bottom tier of the contribution structure (for now). However, they will reconsider this once the Scheme Advisory Board (SAB) and DHSC have reviewed the HMRC process for staff to access top-up payments. And the second is that they won’t now freeze the top tier of the contribution structure.
What’s more, DHSC confirmed that they’d work with SAB to review the application of annualisation to assess contributions for sessional GPs.
How Xeinadin can help
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