The Department for Health and Social Care (DHSC) is responsible for the NHS Pension Scheme for England and Cymru/Wales. Periodically they suggest and consult on changes to the pension scheme.
A recent consultation took place covering several changes to the structure and operation of the NHS Pension Scheme for England and Cymru/Wales.
UNISON represents members’ interests through the NHS Scheme Advisory Board (SAB). UNISON’s response to the consultation can be read here.
The DHSC has published their response to the consultation on proposed changes to the NHS Pension Scheme from 1 April 2024.
In summary, the Government response confirms:
Reforming member contributions: phase 2
- Implementation of the second phase of member contribution rate changes.
- No immediate removal of the first contribution rate tier*.
*There is a commitment to work with the SAB to consider and monitor the arrangements that HMRC is putting in place to administer the top-up payments, to understand how NHS staff would access the payments and any support that may be appropriate. This will inform future intentions relating to the first tier.
- A new indexing method, meaning that each April the pension contribution tiers will increase in line with CPI inflation measured in the previous September*.
*The DHSC will apply a ‘better of’ test and further increase these thresholds in line with the Agenda for Change pay award in England if that is higher than CPI.
- No freezing of the entry threshold to the top tier.
- There will be a further consultation to explore real-time re-banding, which is not being implemented at this time.
- Amendment of the 2015 Scheme definition of overtime to provide that, from 1 April 2024, ‘additional hours’ worked by members up to 37.5 hours per week are pensionable*.
*except for the first 12 months when a member takes partial retirement (draw down).
New employer contribution rate
- Implementation of a new employer contribution rate of 23.7%
Miscellaneous and consequential amendments
- From 1 April 2024, pension abatement rules for special class members will be permanently removed.
- From 1 April 2024, members who take unpaid carer’s leave will be treated as having continued in pensionable service during the time that they are absent from work.
- Extension of eligibility for partial retirement to 1995 Section members who have reached maximum pensionable service.
- The effect of salary sacrifice arrangements on pensionable pay will be disregarded for partial retirement purposes.
- In relation to Lifetime Tax Allowance abolition as provided by the Finance Act 2024, essential changes are made to ensure existing partial retirement provisions continue to operate as intended and a new category of lump sum can be drawn from the NHS AVC schemes.