Need to know
For #TeamEEAST Last updated: 02 May 2024 at 16:44
Recent changes to NHS Pension contributions and the NHS pay award will begin to come into effect from the September pay run.
As you will have seen from our recent article the NHS pay award is payable in September’s payroll which includes arrears of back pay to 1 April 2022.
NHS Pension contributions are based on a contribution rate (percentage) being applied to pensionable pay during the year. The contribution rates apply to bandings of pay starting at 5% going up to 14.5%. The Pay Award has changed pay points, and this may lead to your pensionable pay attracting a different contribution rate. You can find out more at: Cost of being in the Scheme | NHSBSA
The pension contributions collected in September will reflect the arrears of pension from the increased pay and the arrears of pension from the changed contribution category.
Contribution categories as apply in September:
|
Tier |
Pensionable pay (whole time equivalent) / earnings used to assess contributions rate |
Contribution rate from 1 April 2015 |
|
1 |
Up to £15,431.99 |
5.0% |
|
2 |
£15,432.00 to £21,477.99 |
5.6% |
|
3 |
£21,478.00 to £26,823.99 |
7.1% |
|
4 |
£26,824.00 to £47,845.99 |
9.3% |
|
5 |
£47,846.00 to £70,630.99 |
12.5% |
|
6 |
£70,631.00 to £111,376.99 |
13.5% |
|
7 |
£111,377.00 and over |
14.5% |
Example 1: Band 3 entry point
As an example, a full-time staff member at the entry point for Band 3 receiving £20,330 before the pay award and receiving £21,730 after the pay award will have their pension contribution tier changed from tier 2 (5.6%) to tier 3 (7.1%) as a result of the pay award.
From the £700 pay award and arrears (from 1 April to 30 September = 6 months), £202 of increased pension contribution and arrears arise. The entry point for band 3 pay award equated to a 6.9% increase so even with the 1.5% increase in pension bands an increase in taxable pay of £498 is expected in September.
Example 2: Band 5 entry point
As an example, a full-time staff member at the entry point for Band 5 receiving £25,655 before the pay award and receiving £27,055 after the pay award will have their pension contribution tier changed from tier 3 (7.1%) to tier 4 (9.3%) as a result of the pay award.
From the £700 pay award and arrears (from 1 April to 30 September = 6 months), £347 of increased pension contribution and arrears arise. The entry point for band 5 pay award equated to a 5.5% increase so even with the 2.2% increase in pension bands an increase in taxable pay of £353 is expected in September.
Example 3: Band 8a entry point
As an example, a full-time staff member at the entry point for Band 8a receiving £47,126 before the pay award, and receiving £48,526 after the pay award will have their pension contribution tier changed from tier 4 (9.3%) to tier 5 (12.5%) as a result of the pay award.
From the £700 pay award and arrears (from 1 April to 30 September = 6 months), £842 of increased pension contribution and arrears arise. The entry point for band 8a pay award equated to a 3.0% increase, the 3.2% increase in pension bands results in a decrease in taxable pay as a result of £142 for the first 6 months of the year. Tax rates are personal to an individual but at 20% the net pay in September could be lower by £114. Please note that this reverses from October please read the below information on contributions after October.
Please note: These positions are temporary and only relate to September’s pay run.
From October:
As you may have seen in the recent NTK article new pension contributions arrangements apply to NHS Pension scheme members from 1st October.
|
Pensionable salary range from 1 October 2022 (the new salary ranges have been consulted on and will be published shortly on www.gov.uk): |
Contribution rates from 1 October 2022 (based on actual annual pensionable pay): |
Future planned contribution rates (based on actual annual pensionable pay): |
|
Up to £13,231 |
5.1% |
5.2% |
|
£13,232 to £16,831 |
5.7% |
6.5% |
|
£16,832 to £22,878 |
6.1% |
6.5% |
|
£22,879 to £23,948 |
6.8% |
6.5% |
|
£23,949 to £28,223 |
7.7% |
8.3% |
|
£28,224 to £29,179 |
8.8% |
8.3% |
|
£29,180 to £43,805 |
9.8% |
9.8% |
|
£43,806 to £49,245 |
10% |
10.7% |
|
£49,246 to £56,163 |
11.6% |
10.7% |
|
£56,164 to £72,030 |
12.5% |
12.5% |
|
£72,031 and above |
13.5% |
12.5% |
These new salary ranges will change each year in line with any annual increase to Agenda for Change pay scales. The means that members will be less likely to move into a higher contribution tier as a result of a national pay award.
For each of the staff in the examples above the pension contribution rate in and after October’s pay decreases, meaning taxable pay will increase in October.
Band 3 receiving £21,730 after the pay award will have their pension contribution tier changed from tier 3 (7.1%) as a result of the pay award to 6.1% as a result of the October change (a reduction of £18 a month).
Band 5 receiving £27,055 after the pay award will have their pension contribution tier changed from tier 4 (9.3%) as a result of the pay award to 7.7% as a result of the October change (a reduction of £36 a month).
Band 8a receiving £48,526 after the pay award will have their pension contribution tier changed from tier 5 (12.5%) as a result of the pay award to 10.0% as a result of the October change (a reduction of £101 a month).
If you have any concerns or questions, please contact:
Published 7th September 2022