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Band 8 staff face cut in take-home pay

Published on: 6 Sep 2022

NHS England has warned that the latest pay award will mean some senior staff on Agenda for Change will see a cash fall in their take-home pay this month.

The government’s pay settlement for 2022-23 – a modest cash-terms increase, which varied depending on AfC band – has seen some people move into a higher pension contributions tier. This affects those who are at the bottom of bands 3, 5 and 8a, according to a warning note issued by NHS England.

For those in band 8a, individuals’ contribution has increased from 9.3 per cent to 12.5 per cent. They will be particularly hit as their back pay, from 1 April to 30 September, will not be enough to offset the pension arrears caused by this change.

The details of the AfC pay deal mean this group are already receiving only a 2.6 per cent cash terms increase, less than most other NHS staff, who are all receiving an increase well below inflation.

Band 8a covers senior clinicians, and many managers under director level.

With the pension arrears due to be paid in September, it will mean their net pay falls in cash terms compared to August.

In a message to staff on Monday, Em Wilkinson-Brice, NHSE’s national director of people, said: “For some colleagues the pay award will mean that their salary takes them above a pension threshold and their contribution rate will increase…

”Employers are encouraged to identify those impacted by this issue to make them aware, and to offer the option of paying any outstanding arrears in instalments rather than in one lump sum, where appropriate.”

A separate letter to staff from an unnamed trust warning band 8a staff about the issue gained significant attention on social media over the weekend. 

It comes with further government changes to how much staff paid towards their NHS pensions due to be introduced on 1 October, which will further affect take-home pay.

One pensions expert told HSJ they believed the net effect would be a reduction in total annual take-home pay, in cash terms, for staff on band 8a. This is yet to be confirmed, however.

The changes are aimed at reducing tiers to create a “flatter” structure of contributions, and also to move thresholds in line with annual Agenda for Change awards.

Jon Restell, chief executive of Managers in Partnership, told HSJ there are “too many disincentives for band 7 staff to progress to band 8a,” which could “deter” staff from seeking promotion.

He said: “Ultimately, the low percentage pay increase is driving these issues. If the government offered staff a meaningful pay rise, take home pay would rise alongside pensions, not cancel each out.”

A Department of Health and Social Care spokesman said: “From 1 October, new changes to pension contributions mean that tier boundaries will be increased annually, in line with the pay award in England – reducing the possibility of a small number of members having their take-home pay reduced as a result of crossing into a higher contribution tier.

“Over one million NHS staff – including nurses, paramedics and midwives – will receive a pay rise of at least £1,400 this year, with lowest earners to receive up to 9.3 per cent.”