NHS pension employer contributions rates to rise from next month

Members contributions will remain unchanged until at least March 2021.

James McKay
6 March 2019
NHS Payslip

The amount employers contribute towards the NHS Pension Scheme will rise from next month.

The Department of Health and Social Care (DHSC) has confirmed that the employer contribution rate will increase from 14.3 per cent to 20.6 per cent from 1 April 2019.

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The change in rate was prompted by the revaluation of the scheme – which suggested an increased employer contribution rate was needed.

Following recommendations from the Scheme Advisory Board, members contributions will remain unchanged until at least March 2021.

A consultation over the change revealed increasing concerns that the added financial burden may force employers to review their current workforce.

The government has confirmed it intends to provide additional funding for the NHS to cover the increased costs of the rise with an extra £1.25bn a year in funding to cover ‘specific pension pressure’.

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‘No immediate effect on employers’.

Last month, Chase de Vere Medical raised concerns over the number of staff opting out of the NHS’s ‘excellent’ pension scheme due to a squeeze on take-home pay.

Deborah Wood, Vice Chairman of the Association of Independent Specialist Medical Accountants, said: “From a cashflow point of view there will be no immediate effect on the majority of NHS employers, including hospitals, trusts and GP practices. In 2020-21 employers will pay the full 20.68 per cent but should have received funding to cover the extra cost.

Ms Wood added: “The tax impact on individual employees, particularly GPs who are deemed to pay their own employer contribution for tax purposes, needs to be understood.

“If HMRC takes into account the additional 6.3 per cent when determining exposure to the pension annual allowance and subsequent tax charges, then an increasing number of GPs could find themselves affected by annual allowance tax charges on a regular basis.”

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