Contributions to the NHS Pension Scheme are changing

In 2022, the Department of Health and Social Care (DHSC) proposed changes to the amount members pay for their NHS Pension benefits. We wrote to members at the time and explained that some changes would take effect on 1 October 2022, while others would happen later. 

The DHSC launched a further public consultation in October 2023 to set out the proposals for the second phase of these changes to member contributions. In February this year, the DHSC confirmed that some of the proposed changes will go ahead on 1 April 2024.  

Changes that apply to all members 

Contribution rates may change 

The following changes to contributions confirmed by DHSC are the second and final phase of reforms informed by the latest review.  

The amount many members pay will stay the same, and some will pay less. For members who will pay higher contributions, the maximum increase from 1 April 2024 is 0.8%, which means the difference to contribution amounts is likely to be small.  

The table over the page shows the new contribution rates for each salary range. 

Employers will contribute more 

From 1 April 2024, the amount employers pay towards members’ pensions will go up from 20.6% to 23.7% of pensionable pay. 

The transitional approach that has operated since 2019/20 for employer contributions will continue in 2024/25. This means that from 1 April 2024 an employer rate of 23.7% (23.78% inclusive of the administration charge) will apply. However, we will continue to collect 14.38% from you under your normal monthly payment process to the NHS Pension Scheme. You should ensure that your payroll provider continues to apply an employer contribution rate of 14.38% for 2024/25. 

For NHS organisations, employers should carry on paying pension payments as normal: 

• we will continue to collect 14.38% from employers and organisations should plan on this basis 

• central payments will be made by NHS England for the remaining 9.4%. 

For organisation currently invoiced separately, you will continue to receive invoices: 

• DHSC invoices will increase to account for the additional 3.1% contribution rate for Local Authorities (including County Councils), Ministry of Defence – People, Pay & Pensions Agency and for 2.64% of the 3.1% rate for University Medical Schools costs  

• Local Authorities (including County Councils) and Ministry of Defence – People, Pay & Pensions Agency invoices will remain the same  

• University Medical School invoices will increase to take into account the remaining 0.46% of the 3.1% rate. This split has been determined to account for the fact that University Medical Schools are commissioned both centrally (through Government and the NHS) and externally 

• DHSC Arms-length bodies invoices will increase to account for the additional 3.1% rate, and funding will be provided accordingly.  

Changes to the way contribution tiers are reviewed each year  

Contribution tiers will be automatically reviewed in line with the % increase in the Consumer Price Index (CPI) on 1 April every year, with the exception of the lowest tier. This rate already anticipates that members’ earnings in this tier may not be high enough to benefit from tax relief on their pension contributions. If the Agenda for Change pay award for England that is announced later in the year is higher than the increase in CPI, contribution tiers will be updated to reflect the higher pay award. 

Changes that only affect some members  

Overtime is pensionable for part-time workers except where a member has recently taken partial retirement  

Overtime/additional hours for part-time members counts as pensionable pay up to their full-time equivalent pay, unless they have taken partial retirement in the previous 12 months. For these members, any additional hours worked above their contractual hours won’t count towards pensionable pay during the 12-month period after partial retirement.. 

‘Abatement’ rules will be removed for good 

The rules for how a pension might be reduced for Special Class and Mental Health Officer (MHO) members who retire on age grounds but return to work before age 60, have been suspended since March 2020. These rules will be removed permanently. 

So, from age 55, Special Class and MHO members can take up to 100% of their pension benefits, stay in work, and continue to build up pension benefits in the 2015 Scheme – without having their pension reduced or stopped.  

1995 Section members with maximum service will be able to apply for partial retirement 

The existing regulations do not let members of the 1995 Section take partial retirement if they have reached their maximum service limit. These members can now apply for partial retirement from 1 April 2024, if they have the support of their employer. 

Lifetime allowance (LTA) charges will no longer apply 

HM Treasury announced in March 2023 that the LTA would be removed. DHSC has confirmed updates to the relevant Scheme regulations which will make sure these rules continue to work as intended once the LTA is removed on 6 April 2024. 

Carer’s leave will count towards pensionable service 

In line with the Carer’s Act 2023, members who take carer’s leave will continue to build up pension benefits during this time away from work. Employers will continue to pay contributions based on their pensionable pay, and members will pay any contributions they owe when they return to work.  

ESR real-time re-banding 

There will be a delay to the implementation of ESR real-time re-banding that was due to commence from 1 April 2024.  

This means that you should continue to use the current arrangements. 

We’ll provide further information as soon as we can.