NHS pension scheme changes – consultation

15 October 2021

The Department of Health and Social Care has opened a consultation to explore changes to the member contribution structure from April 2022. 

As the scheme has moved away from being final salary linked to a career average revalued earnings (CARE) model, the consultation explores simplifying the contribution tiers to ‘flatten’ the model. Current tiers are weighted so that higher earners contribute proportionately more to access the benefits of the scheme.

There are four main areas covered by the proposals:

•    Contributions are to be based on actual pensionable pay, rather than the current notional whole time equivalent pay (a system used to calculate a full time equivalent salary for part time workers). This will ensure part-time workers’ contributions are reflected more accurately and will see the amount they pay reduced. This change is proposed mainly due to the declining number of members with a final salary link
•    Using fewer contribution tiers as feedback from stakeholders has indicated a desire for this. The tiers proposed have been designed to retain the 9.8% average member contribution needed to protect the affordability of the scheme
•    Increasing the member contributions tiers with the annual pay awards under agenda for change. Under the current scheme annual salary increases, agreed centrally, can result in a member changing tiers and a net reduction in take-home pay. The proposal explores changing the tier boundaries in response to the pay awards
•    Phasing the proposed changes over a two year period to minimise impact on take-home pay, give members time to adjust and to ease the administrative burden on the scheme administrators

The consultation closes on 7 January 2022 and responses can be made online.

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