NHS Pension Scheme changes from April 2024

Summary of the outcome

The consultation confirmed the following changes:

• The member contribution structure reduced from 11 to 6-tiers, with effect from 1 April 2024.
• Member contribution tiers automatically increase annually, in line with the Consumer Price Index (CPI) figure from the previous September. 
• If the annual Agenda for Change pay award for England is above CPI, a further change to contribution tiers is made in line with the pay award. This helps reduce cases of members tipping into higher contribution rates as an unintended consequence.
• The first tier and entry to the second tier continue to not increase by either method.
• Real-time re-banding will be considered during a period of further consultation on the detailed requirements and implications, with the intention of implementation from April 2025. This is to give time for payroll systems to implement the required changes.

The member contribution structure as of 1 April 2024, with the CPI uplift (September 2023 6.7 per cent) is as follows:

• Overtime for part-time staff is pensionable up to 37.5 hours per week in the 2015 Scheme, aligning the 2015 Scheme with the 1995 and 2018 Scheme regulations. Overtime is not pensionable where partial retirement has been taken in the last 12 months.
• The employer contribution rate increased from 20.6 per cent to 23.7 per cent, plus the existing 0.08 per cent scheme administration charge. The increase of 3.1 percentage points is met centrally for most employers. Medical schools receive 2.64 per cent increase in funding. The funding commitment will be reviewed as part of the next spending review.
• Abatement for special class status (SCS) members has been permanently removed.
• Members taking unpaid carer’s leave are treated as having continued in pensionable service during the time they are absent from work.
• Removal of Lifetime Allowance references, which is dependent on the Finance Act. These essential changes 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.
• Access to partial retirement for those subject to maximum service limits from 1 April 2024. 
• Salary sacrifice arrangements are excluded as an eligible means of managing the 10 per cent reduction in pensionable pay for partial retirement eligibility. 

Proposals that DHSC did not take forward included the following.

• DHSC have not removed the bottom tier of the contribution structure at this time. DHSC will reconsider this once the Scheme Advisory Board (SAB) and DHSC have reviewed the HMRC process of how staff would access top-up payments.
• No freezing of the top tier of the contribution structure. 

Additionally, DHSC has confirmed its intention to review with SAB the current application of annualisation to assess contributions for sessional GPs.

The changes to the member contribution structure are underpinned by the following principles.

• Protect the lower paid.
• Minimise the risk of opt-outs from the scheme across the whole membership.
• Ensure that the scheme remains sustainable, continued to be a valuable part of the reward package and, is affordable for all members

Information about phase one of member contributions structure reform can be found on our web page.