NHS Pension Scheme - member contributions 2023/24

Member rates are now determined using actual pensionable pay, earned in the previous scheme year, instead of whole-time equivalent pay.

Many part-time employees now pay a lower contribution rate as a result of this change.

The number of contribution tiers was reduced from seven to six, with the top rate for the highest earners also reduced from 14.5 per cent to 12.5 per cent. This reduced the steepness of the tiering, creating a flatter structure, which is considered to be appropriate in a CARE scheme, where all members get the same proportional benefits.

For many members, the new structure changed the amount they pay into the NHS Pension Scheme. Some scheme members now pay a higher rate and are required to contribute more to the scheme than they previously did. Others, including high earners and part time staff, now have a lower rate and contribute less.

Members of the NHS Pension Scheme are required to collectively contribute an average of 9.8 per cent of pensionable pay to the scheme. In the previous tiered contribution structure, higher earners paid proportionally more in contributions than lower earners, to ensure that the scheme remained accessible and affordable for all members.

The high level of subsidy that higher earners previously provided to lower earners is no longer considered to be appropriate in a CARE scheme, where all members get the same proportional benefits, unlike in a final salary scheme. As all active members moved to the 2015 CARE scheme on 1 April 2022, it makes sense to have a contribution structure best suited to a CARE scheme.

Impact on scheme benefits

The changes introduced will not impact the scheme benefits members will receive. A member’s contribution rate to the NHS Pension Scheme is not linked to the value of pension benefits they will receive in retirement. Therefore, if a member’s contribution rate reduced from 1 October 2022, the value of their pension benefits in the NHS Pension Scheme will not have changed as a result. 

Members may choose to pay additional contributions to increase their pension if they wish. This can be done in many different ways and further information is available on the NHS Pensions member hub.

The payment of an award triggers a reassessment of pension contribution rates for members of the NHS Pension Scheme.

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.

Member contribution tier thresholds for 2023/24

Following a consultation from the DHSC, the pensionable earnings bands in the member contribution structure were increased in line with the 2023 Agenda for Change pay award in England. The uplifted tiers were implemented retrospectively with backdated effect to 1 April 2023. 

Changes to the member contribution structure are split across two phases. This approach was designed to minimise the impact on take-home pay while giving members time to adjust to the changes.

Phase one was introduced from 1 October 2022 and consisted of changing to using actual pensionable pay, the new structure, and uplifting tier thresholds annually in line with the AfC pay award.

Phase two will change the member contribution rates again and will help to further level out the structure, making it more appropriate for a CARE scheme.

The implementation date for phase two is not yet confirmed. We will communicate it to employers once known.

Aggregation of income from multiple employments

Currently, members with multiple employments are assigned a contribution rate based on their earnings for each post. DHSC intends 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.