NHS Pension Scheme - member contributions 2024/25

Changes to take home pay

The new contribution structure in place from 1 April 2024 may result in changes to some members’ take home pay. Many members will continue paying the same contribution rate as they paid before. Some will pay less in contributions. For members whose contribution rate will increase from 1 April 2024, NHS Pensions analysis shows that this will be by a maximum of 0.8 per cent. 

No detrimental impact on scheme benefits

The changes introduced will not impact the scheme benefits members will receive in retirement. A member’s contribution rate to the NHS Pension Scheme is not linked to the value of pension benefits they will receive in retirement. Instead, members build up pension benefits at a rate of 1.85 per cent of pensionable pay in the 2015 Scheme. Therefore, if a member’s contribution rate reduces from 1 April 2024, the value of their pension benefits in the NHS Pension Scheme will not have changed as a result. To learn more about how benefits build up, see our promoting the value of the NHS Pension Scheme videos and presentation.

Members may choose to pay additional contributions to increase their pension if they wish.

Uplifts to contribution tiers

Help members to understand that their contribution rates automatically increase each April, in line with the Consumer Price Index (CPI) figure from the previous September. CPI measures the rate of inflation in the UK. 

If the annual Agenda for Change pay award for England is above CPI, a further increase to contribution tiers will be made in line with the pay award. This benefits members by reducing the likelihood of moving into a higher contribution tier as a direct result of a national pay award and experiencing a reduction in take home pay.

These plans give staff certainty about when to expect uplifts to their contribution rates.

The first tier and entry to the second tier will not be increased. These discounted contribution tiers are targeted towards staff with earnings within the personal income allowance, who do not benefit from tax relief on pension contributions. 

The employer contribution rate has increased 

It’s important to remind members that employers pay a significant contribution to the cost of their pensions. From 1 April 2024, the employer contribution rate will increase to 23.7 of members’ pensionable pay. This is a key benefit that helps make the NHS Pension scheme one of one of the most comprehensive and generous schemes in the UK and an important part of the overall reward offer for NHS staff. 

Talking to staff regularly about the benefits the pension scheme offers helps them to understand and appreciate the value of the scheme. We have resources to help you promote the benefits of the NHS Pension Scheme to staff:

• The value of the NHS Pension Scheme poster
• Communicating the benefits of the NHS Pensions Scheme
• Promoting the value of the NHS Pension Scheme videos and presentation

From 1 April 2024, the number of contribution tiers will reduce from eleven to six. From October 2022, the top contribution rate for the highest earners reduced from 14.5 per cent to 12.5 per cent. 

These measures reduce the number of tiers and the range between the highest and lowest tier. This creates a flatter contribution structure, which is considered by some to be more appropriate in a career average revalued earnings (CARE) scheme. In a CARE scheme, like the 2015 Scheme, all members get the same proportional benefits based on their earnings across their career. 

Members of the NHS Pension Scheme are required to collectively contribute an average of 9.8 per cent of pensionable pay to the scheme. Higher earners pay proportionally more in contributions than lower earners, to ensure that the scheme remains accessible and affordable for all members. 

The following table shows the previous eleven-tier contribution structure that was in place from 1 April 2023 to 31 March 2024, as a point of comparison. 

Pensionable pay tier thresholds for members of the NHS Pension Scheme will be automatically uplifted each April, in line with the Consumer Price Index (CPI) figure from the previous September. CPI measures the rate of inflation in the UK. 

If the annual Agenda for Change pay award for England is above CPI, a further change to pensionable pay tier thresholds will be made in line with the pay award. 

Annually uplifting the pensionable pay tier thresholds reduces the likelihood of a member moving into a higher contribution tier as a direct result of a national pay award, which has previously led to a net-reduction in the individual’s take home pay.

The first tier and entry to the second tier will not be increased by either method, as is the case now. These discounted contribution tiers are targeted towards staff with earnings within the personal income allowance, who do not benefit from tax relief on pension contributions. 

The new member contribution structure from 1 April 2024 includes rates uplifted by 6.7 per cent, the CPI measure from September 2023.

Member contribution rates are determined using actual pensionable pay, earned in the previous scheme year, instead of whole-time equivalent pay. This has been in place since October 2022. 

DHSC are exploring further changes to the member contribution structure which may be introduced in future. 

Real time re-banding

Real time re-banding refers to the intention to automate employer processes for updating member contribution rates for members who have pay that fluctuates across tier boundaries between pay periods. DHSC intend to consult further on real-time re-banding to explore in detail its requirements and implications, with the intention of implementation from April 2025. Employers should continue to use current arrangements in the meantime. 

Aggregation of income from multiple employments

Currently, members with multiple employments are assigned a contribution rate based on their earnings for each post. DHSC intend to aggregate earnings across multiple employments for the purposes of assessing contribution rates, once more automated systems are in place. Aggregating annual rates of pay would mean that a part-time member with multiple roles would build up pension at the same price as a full-time member earning the same overall amount and means that there is no unfair advantage in dividing up a role into multiple part-time roles.

Removal of the first contribution tier

HMRC plan to offer top-up payments to individuals with earnings within the personal income tax allowance who contribute to a pension scheme. These payments will give individuals the amount of tax relief they would have received on their pension contributions if their income was subject to income tax. 

DHSC will monitor HMRC’s process for distributing these top up payments and consider removing the lowest contribution rate from the structure at a future date. 

The first contribute rate in the NHS scheme is currently discounted for members who do not get the benefit of tax relief on their pension contributions because they earn within the personal income tax allowance. If these individuals receive top up payments from HMRC to provide equal tax relief to members, the rationale for the discounted first tier is lost.

Annualisation for locum GPs

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

We submitted responses to DHSC’s consultations on the changes and represented the feedback we received from employers from across the NHS. Read our responses to phase one (PDF) and phase two (PDF) of member contribution reform.