Staff will see more money paid into their NHS pension pots by their employer, the Government has confirmed.
The employer contribution rate for the NHS pension scheme is rising from 20.6% to 23.7%, at the start of April, to ensure it has sufficient funds.
However, the new rate will not incur extra costs for GP practices since the increase is to be centrally funded.
Currently, employers are responsible for a contribution of 14.3%, with the outstanding (6.3%) funded centrally by NHS England or the Department for Health and Social Care.
This arrangement will continue and expand to include the additional increase of 3.1 percentage points.
The move was proposed under a Government consultation on the NHS pension scheme, which ended in January and received 160 responses including from the BMA.
A response paper, published last week by the Department of Health and Social Care, said that after having received positive feedback it was going ahead with the increase.
A number of other key changes have been announced in the consultation outcome, including adjustments to member contribution rates, which apply from this April (see table below).
It’s been confirmed that the highest earners in the top tier (with pensionable earnings above £75,633) as per the current arrangement will have their contribution rate cut from 13.5% to 12.5%, as thresholds have been flattened and the top tier removed.
Other changes to the tier structure will mean others could see their contribution rate fall too – while some members will be paying more.
| Pensionable earnings | Contribution rate from 1 April 2024 |
| 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% |
The Government is also adopting a new approach to the way member contribution tier thresholds are increased annually. From April 1, they will automatically be linked to inflation via the consumer prices index (CPI) and be increased further if necessary to align them to Agenda for Change (AfC) pay increases in England.
‘The department commits to a “better of” test and applying any marginal increase to thresholds based on the AfC (England) pay award if this is higher than CPI. We believe this approach gives members the best features of each approach,’ said the Government’s consultation response.
Other changes, to be implemented from this April, include:
- amending the definition of overtime to provide additional hours worked by members up to full time are pensionable, except where a member has taken partial retirement in the preceding 12 months
- removing permanently the pension abatement rules that apply to members who retired early using special class rights
- allowing 1995 Section members who have reached maximum pensionable service to take partial retirement.
In addition, employees who are unpaid carers and take their entitlement of one week of unpaid leave a year will now have that counted as pensionable service. Previously, this wasn’t the case meaning it was out of kilter with other authorised absences from work, such as maternity leave.
‘This ensures that members are able to take time away from the workplace to care for dependents with long-term care needs without missing out on the valuable employer contribution to their pension savings’, the response paper said.
