Pensions

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Final pay controls

Final pay control is applicable to the 1995 section of the NHS Pension Scheme. It also applies to those who have retained final salary linking to the 1995 section (by not having a break in pensionable service of five years or more) but have transitioned to the 2015 Career Average Revalued Earnings scheme.

From 1 April 2015 (in England, Wales and Northern Ireland and from 1 July 2014 in Scotland) a penalty may be applied to an NHS Employing Authority, including GP practices, where a scheme member is awarded an increase to pensionable pay which exceeds an ‘allowable amount’. The ‘allowable amount’ is the lesser of the pay itself or the pay in the previous year increased by CPI (from February) plus 4.5% or the percentage increase in the current years pay compared with the previous years’. If the allowable amount is exceeded in any of the three years leading up to retirement (or any three years when Final Pensionable Pay is calculated for the purposes of ascertaining benefits) then the employer may be liable for a charge. The individual’s pay will not be capped. The charge does not apply where benefits are payable as a result of death in service or in deferment.

This means that additional costs may be incurred by the employer/practice if scheme members retire or leave the NHS pension scheme within three years of receiving this type of award.

 

Further information on how to calculate these costs