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NHS pension contribution rates cut for the highest earners

Published on: 6 Nov 2023

Government has revealed changes to the contribution rates for the NHS pension scheme, including a reduction in the percentage paid by top earners.

The new payment bands have been published in a Department of Health and Social Care consultation.

The new bands mean that any member of the NHS scheme with pensionable earnings of more than £75,633 per year, will have to make a contribution of 12.5 per cent rather than the existing 13.5 per cent. This amounts to a reduction of just over £750 each year.

The changes will affect many at the top of Agenda for Change band 8 and almost all on band 9 or those classified as a very senior manager. 

The proposals build on a 2021 consultation on pension scheme contributions. It was later decided these changes should be staggered over two phases to allow people time to adjust.

The most recent consultation confirms how the government will flatten the contribution structure to six tiers. The scheme initially had seven tiers, which increased to 11 in an interim structure introduced in April. 

The earning thresholds for the six tiers have changed since the earlier consultation to reflect pay awards which have since taken place

DHSC is not seeking views on the updated structure as part of the consultation, which runs until 7 January 2024. However, it is looking for feedback on related issues, including better indexing the thresholds so pay awards do not result in people receiving less take-home pay after getting moved to a higher contribution tier

Managers in Partnership chief executive Jon Restell said: “There are already too many disincentives for staff seeking promotion to higher bands in the NHS, with increased pension contributions among them. The flatter structure can help address this by removing the steepness between contribution tiers, making it fairer for scheme members…

“While the NHS pension scheme remains among the best available in the country, the overall cost to employees is still higher than elsewhere in the public sector. These proposed changes are welcome but they do not change that fact.”