Pensions

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Contributions in the 2015 NHS Pension Scheme

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

 

The Department of Health has recently confirmed that the same tiered contribution structure that is in place for 2014-15 will continue beyond 2015 in England and Wales. This was also confirmed this week for the Scottish NHS Pension Scheme and is expected to be the case in Northern Ireland.

The BMA made extensive representations to government on the appropriateness of tiered contributions in a Career Average Revalued Earnings (CARE) scheme and these arguments are set out in the document Public Sector Pension Reform: Challenging Unfairness

Despite the compelling arguments put forward by the BMA the government has now committed to retaining the existing structure of contributions, until at least 2019.

Therefore the contribution rates from April 2015 will continue in the same way as those that are currently in place:

Tier Pensionable Pay (whole-time equivalent) paid in 2013-14 Contribution Rate in 2014-15

1

Up to £15,431.99

5.0%

2

£15,432.00 to £21,387.99

5.6%

3

£21,388.00 to £26,823.99

7.1%

4

£26,824.00 to £49,472.99

9.3%

5

£49,473.00 to £70,630.99

12.5%

6

£70,631.00 to £111,376.99

13.5%

7

£111,377.00 and over

14.5%

Pension scheme contributions are net of tax; therefore the true cost of the contributions is lower than the gross rates quoted above.

For higher rate tax payers, contributions at the rate of 12.5% would equate to a net 7.5%, contributions at the rate of 13.5% would equate to a net 8.1% and contributions at the rate of 14.5% would equate to a net 8.7%.

Part-time doctors are allocated to a tier based on their whole-time equivalent pay (apart from GPs, for whom there is no concept of whole-time equivalent). This may seem unfair at first reading.

The main legislation that governs the treatment of part-time workers is the Part-time workers (Prevention of Less Favourable Treatment) Regulations 2000 ('the Regulations').

This states that "A part-time worker has the right not to be treated by his employer less favourably than the employer treats a comparable full-time worker".

 

Let's consider two doctors...



Dr X Dr Y
Earns £120,000 a year Earns £60,000 a year
Works full-time Works part-time

Both would be allocated to tier 7 (14.5% contribution rate)

The reason for this is that Dr X is a 'comparable full-time worker' for the purposes of the Regulations.

The remuneration of Dr Y is the same, for each hour worked, as it for Dr X thus there is no less favourable treatment.

If Dr Y were to be subject to a lower contribution rate (for example if actual pay was used and they paid 12.5%) then they would be being better remunerated per hour that their full-time equivalent colleague. 

 

What's next?

Read the next update for October which focuses on your decision timeline for Choice 2

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