Pensions

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Auto-enrolment and changes to NI rebates

2015 NHS pension scheme

Read the monthly updates written by the BMA Head of Pensions over the last year to help you familiarise yourself with the new 2015 NHS Pension Scheme which launched on 1 April 2015.

Start with our general overview of the scheme:

1  Stay one step ahead - get the basics of the scheme
2  When can I draw my pension benefits?
3  Auto-enrolment and National Insurance rebates
4  Opting out of the NHS Pension Scheme
5  Choice 2 exercise
6  Contributions
7  Are you ready for Choice 2?
8  What happens to my Mental Health Officer status?
9  BMA response to the 2015 NHS Pension Scheme draft regulations
10  Have you received your 'Choice 2' letter?
11  Act now to make your choice 2 decision
12  A recap on the basics of the 2015 NHSPS

 

Strictly speaking, neither of these subjects is directly related to the changes to the NHS Pension Scheme from April 2015.

However, they are both very important issues and it is essential that primary and secondary care doctors are fully are of the potential implications.

 

Auto-enrolment

Auto-enrolment legislation is now in place. It is intended to encourage pension savings. This legislation requires all employers to automatically enrol their staff (depending on age and salary level) into a pension scheme that meets certain minimum standards.

New joiners to the NHS have always been automatically enrolled in the NHS Pension Scheme (unless they opt out) and this legislation will enshrine that position more formally.

New joiner?

GPs that employ practice staff will be required to ensure that eligible staff are automatically enrolled into the NHS Pension Scheme.

For staff that may be prevented from joining the NHS pension scheme an 'Alternative Qualifying Pension Scheme' will need to be provided. For example, a 60 year old salaried GP in receipt of an NHS pension who has returned to work will not be able to be enrolled in the NHS pension scheme, but they will need to have an alternative pension scheme offered.

Not eligible?

There are many pension providers of Alternative Qualifying Pension Schemes (AQPS) and employers are free to choose from a wide range of qualifying pension schemes.

The date at which an employer will be required to introduce this new scheme is known as the 'staging date' and is determined by the number of staff you have. Larger employers like hospitals will start earlier than smaller employers.

GP partner?

Auto-enrolment might also be significant for individuals who have chosen to opt out of the NHS Pension Scheme in order to retain enhanced or fixed protection, or to remain within the £40,000 tax-free pension growth limit permitted under the Annual Allowance.

Opted out?

If you have opted out of the NHS scheme for the reasons outlined above you will need to opt out again within one month of the auto-enrolment in order to keep your protections and not breach HMRC rules. Providing you opt-out within the month you will not lose your protection.

Read more facts about auto-enrolment

Are you a GP partner? Find out what action you need to take

 

Changes to National Insurance rebates

The Pensions Act 2014 introduced a new flat rate State Pension from 6 April 2016.

A key element of this change will be the abolition of the State Second Pension (S2P). This means that contracting-out of the S2P will also end.

Contracting-out allows the employer and the employee to pay lower rates of National Insurance contributions (NICs).  

Contracting out is the ability to forgo S2P accrual due to membership of an occupational pension provision which provides broadly equivalent benefits to S2P. Contracting-out allows the employer and the employee to pay lower rates of National Insurance contributions (NICs).

After 6 April 2016 members of the NHS Pension Scheme will pay full NICs and as such will see an increase equivalent to 1.4% of relevant earnings. The maximum additional NICs for employees is estimated to be £480 a year.

For employers (such as GPs who employ practice staff), the removal of the contracting-out rebate will mean an increase in NICs paid for each employee who is a member of the NHS pension scheme of 3.4% of relevant earnings.

 

What's next?

ArrowRead the next update for July which focuses on opting out of the NHSPS

If you have any questions or points to make then please contact the Pensions team