Information for employers

These pages include information for employers on changes to the NHS Pension Scheme for both existing and new members.

The Pensions Division is now leading on implementation and has produced a range of materials to support employers and staff that are available on their website.

The key changes

• Two Schemes:
  • updated NHS Pension Scheme for existing members - still a final salary Scheme with the same Normal Pension Age (NPA) of 60 years (55 for special classes); new benefits like the option to take more pension as a tax free lump sum
  • New NHS Pension Scheme for new members - a final salary Scheme with an NPA of 65; more flexibilities particularly in the run-up to retirement, like the option for staff to step down to a less demanding role and take part of their pension
• New tiered contribution rates (see below) - identical rates for both Schemes that are directly linked to individual earnings for a fairer way to fund new benefits and future costs
• Both Schemes came into effect on 1 April 2008 - active members automatically move to the updated NHS Pension Scheme, with a one-off choice to move to the New NHS Pension Scheme (currently planned for 1 July 2009 to 30 June 2010)

More details on rates

On 1 April 2008 the following contribution rates were introduced.

In 2008/09 contribution rates will be based on pensionable pay in 2007/08. Pay thresholds (eg £19,682) will be adjusted in line with Agenda for Change pay awards. The thresholds in this table are based on 2006/07 pay rates. Under the interim arrangements, manual workers will continue to pay 5% for one year only (2008/09).

FAQs on rates

Why have employee contributions changed?

The rate for some employees has changed but individual contribution rates depend on how much an individual earns. The review partners (NHS Employers and the NHS trade unions) believed that this is the fairest way to fund new benefits and future costs. Under the new arrangements, individual contribution rates are now more closely linked to the pension benefits that individuals receive.

Why have some employee contribution rates gone up?

The updated Scheme for existing members will provide a number of new benefits as well as keeping those such as final salary pensions and the normal retirement age of 60, which was very important to staff. The new rates are directly linked to an individual's pay which has meant a lower rate for some and tiered increases for others.

The review partners believed that this is the fairest way to fund new benefits and future costs, and ensure that the Scheme is sustainable in the longer term.

How did staff find out about the changes?

Information for staff about the changes is available on the Pensions Division website. The Pensions Division has also produced a leaflet for staff which has been distributed to all NHS, GP practice and direction body employers, for distribution with payslips in November 2007.

The review partners believe that the tiered contribution rates, where those on higher salaries contribute more, are a fairer way to fund benefits and future costs.

Why did we review the Scheme?

The Scheme had to change to take into account new legislation on age discrimination, introduced in 2006, and the government's proposal to change the normal pension age to 65 for new members in some public service schemes. More importantly, the review partners wanted to ensure that the Scheme meets the needs of today's NHS and its staff, and following changes to the tax regime for pensions, offered new flexibilities and is sustainable in the longer term.

More information

See the Pension Division's website for information to support employers and staff through implementation.

NHS Employers produced a range of materials with the review partners to support the announcement in 2007. Please note that table on this page has the most up-to-date figures for pensionable pay.

For help on pension terms, see the glossary.