Following a recent consultation, 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 (20.68 per cent including the 0.08 per cent scheme administration levy) from 1 April 2019. The increase is required to meet the cost of scheme benefits, following advice from the Government Actuary’s Department as part of the 2016 scheme valuation process.
The government has committed to providing additional funding for the NHS to cover this cost increase. In our response to the consultation, we asked for clarification on which employers would be eligible to receive the funding and details of how the funding would be distributed to employers. The DHSC has confirmed:
- in 2019/20, NHS England will centrally cover the additional employer’s pension contribution for employers receiving funding from NHS England budgets or from the NHS to deliver NHS services. This includes trusts, clinical commissioning groups, commissioning support units, GP practices, dentists, independent providers, social enterprises, charities, hospices and organisations who have access to the NHS Pension Scheme through New Fair Deal
- further to the commitment given by government in June 2018, the additional funding will recur annually until 31 March 2023
- from 1 April 2019 to 31 March 2020, the scheme administrator, the NHS Business Services Authority, will continue to collect an employer contribution of 14.38 per cent from employers. Central payments will be paid to the scheme by NHS England and the DHSC to cover the remaining increase
- arrangements for funding and the collection of contributions from 1 April 2020 will be confirmed in due course, however the intention is for it to be included in ‘business as usual’ funding flows
- employers who are outside of this scope will receive additional funding to meet part of the cost increase but will need to cover the remaining proportion of the cost increase relating to changes announced in Budget 2016. This includes non-NHS England arm’s-length bodies, local authorities and university medical schools.
Other key points to note from the consultation response:
- member contributions will remain unchanged until 2021
- entitlements to survivor’s pensions will be equalised for civil partners and same sex spouses
- agenda for change pay rises will be excluded from the final pay control regulations and there will be a wider review of the policy.
You can view the full details of the consultation outcome on the gov.uk website.