Back in November, we explained the NHS pension consultation that was underway regarding changes to the NHS pension from April 2024.
With the consultation closed and the government releasing their response this month, Helen Wilson, Senior Client Manger, is here to explain what the changes are.
Over to Helen
On 22nd February, the Department of Health and Social Care released their response to the NHS pension consultation regarding changes to member contributions.
From 1st April 2024, the NHS pension scheme tiers and rates will be amended to implement the second phase of the member contribution rate changes. There is a reduction in the number of tiers, an increase in tier thresholds in line with CPI in September 2023 for the previous 12-month period and a reduction in the top contribution rate from 13.5% to 12.5%.
The new contribution thresholds and rates from 1st April 2024 are as follows:
One important amendment following the consultation was the method of uplifting the pension thresholds each year. The department has committed to uplifting the thresholds in line with CPI for the previous September, but where the AfC (England) pay awards are higher than CPI, the thresholds will be further increased.
Another change is that the employer contribution rate will be increased to 23.7%, plus the existing 0.08% scheme administration charge.
These changes will need to be ratified by Parliament but this is expected to be done before 31st March 2024.
What this means for dentists
The impact of these changes will depend on your pensionable earnings. The following graph compares the new rates (in orange) to the old rates (in grey):
Where the orange line is below the grey line, members will pay a lower contribution rate under the new rates compared to the older rates. What we can see is that dentists with higher pensionable earnings (over £51,709) will pay the same or lower pension contributions from 1st April 2024 under the new pension contribution tiers.
Members with income lower then £13,246 or income between £13,260 and £24,022, £26,832 and £29,635, and £49,709 and £51,708 respectively will pay more into the pension scheme from 1st April 2024. The changes will have a negative impact on a small proportion of dentists while a lot of dentists will either see no change in their pension contributions or a decrease in the amount paid into the scheme.
It is important to remember that the 2015 NHS pension scheme is a career average revalued earnings scheme (CARE scheme) and so it is the pensionable earnings that determines the pension paid out to members and not the pension contributions paid and so a reduction in the pension contributions paid will not affect your final pension.
Here to help
If you have any questions regarding your NHS pension or any other financial matter, our dedicated specialist team are here to help. To speak to our team, give us a call on 0151 348 8400.
