Some SoR members to see significant changes to NHS pension scheme

From April 2024, changes will be made to the NHS pension schemes, as the second phase of changes delayed from 2023 are implemented

Published: 08 March 2024 Government & NHS

SoR members may see a “significant change” in their NHS pension scheme contributions from April 2024 as the second phase of changes delayed from April 2023 are put in place.

From next month, there will be only six contribution bands. Members will continue to only pay contributions on a regular, pensionable pay, with the exception of part-time staff, where overtime is pensionable up to their full-time equivalence. 

Contribution rate changes

NHS pension scheme contribution rates from April 2024:

  • Up to £13,259: 5.2 per cent 
  • £13,260 to £26,831: 6.5 per cent 
  • £ 26,832 to £32,691: 8.3 per cent
  • £32,692 to £49,078: 9.8 per cent 
  • £49,079 to £62,924: 10.7 per cent 
  • £62,925 and above: 12.5 per cent 

During consultation, the SoR alongside other unions raised concerns about the timing of these changes due to delays in making pay awards, and risks over retaining confidence in the scheme if it wasn't for a smooth transition.

These concerns meant this second phase was delayed by a year, and the thresholds have been adjusted from those raised in the government consultation in 2022.

Now, the thresholds have been raised in line with inflation, meaning fewer people will see a further increase in their contributions, and some may pay less than anticipated. The lowest band was frozen, to adjust for tax policy changes which could have left these scheme members with a higher tax liability.

Both these moves have been welcomed by unions.

Concerns and adjustments

The government has also confirmed their experiment in adjusting pay bands in line with pay awards has been abandoned. Future changes will instead happen in April every year, linked with inflation.

For this year the thresholds have increased by 6.7 per cent. If the pay award is more than 6.7 per cent, and some cross a pension threshold, they will likely have to make additional, backdated pension contributions. However, others close to the thresholds may see their contributions reduce for a time after any April uplift. 

The only NHS pay band where a threshold falls mid-band is Band 5. The SoR have led on raising concerns about this, including in Pay Review Body evidence, and are calling for this to be adjusted to prevent a significant proportion of new professionals first increment disappearing in extra pension contributions.

These thresholds remain under review, including with input from the Scheme Advisory Board, where the SoR has direct representation.

'Fair and safe'

Dean Rogers, executive director for industrial strategy and member relations with the SoR, said: “People want the pension scheme to be clear and understandable. They want to know what they will have to pay in and what they’ll get back. It is recognised that constant tweaking of what people pay counters this but some adjustments are necessary for the scheme to remain fair and safe. 

“It’s important that inflation is built in – we would prefer there to be a minimum underpin in any pay award as well. But if inflation were to consistently remain above the pay award there is a risk the thresholds will creep into the middle of pay bands and have unintended consequences on confidence in pay and the scheme. It’s important we are involved in minimising risks.”

Lack of consistency

The SoR is also using the changes as an opportunity to raise growing concerns about the lack of consistency regarding additional pay, and what is classed as pensionable.

In some trusts and boards, contracted additional unsociable hours and additional hours allowances are deemed pensionable – yet in other, similar ones, contractual payments are not.

The SoR also has concerns around what bank staff with access to the NHS scheme are receiving as pensionable pay.

Members with any questions or concerns about pensionable pay, please email [email protected] and the SoR’s regional and national officers will offer support.

Suggested changes to the NHS pension scheme emerged from a consultation carried out in February 2022, the full details of which can be found here.

(Image: Dean Rogers)