Another month, another NHS Pension Scheme Consultation! On the 3rd May 2023, the Department of Health and Social Care opened another consultation on the NHS Pension Scheme, with the consultation closing on 17th May 2023.
To guide us through the proposed changes we’ve asked Senior Client Manager, Matthew Norton, to clarify the proposed member contribution thresholds and to outline the impact this will have on dentists.
What changes have been proposed to the NHS Pension Scheme?
As set out in the consultation response published on 15th February 2022, pensionable earnings thresholds for member contributions are to be uplifted annually, to account for Agenda for Change (AfC) pay increase.
This was introduced to stop members whose pensionable earnings increase due solely to an increase to the AfC pay bands, from moving into a higher pension contribution rate. This could then result in their tax home pay reducing, and was an unwanted impact of pay rises, previously seen under the previous pension contribution tier rates.
What are the proposed member contribution thresholds?
The proposed member contribution thresholds, backdated to 1st April 2023 are:
Table showing proposed member contribution thresholds
Most of the thresholds have risen by 5%, although tier 1 pensionable earnings have stayed at the previous year’s level.
What impact will this have for dentists?
The answer depends on your pensionable earnings. Some dentists may now pay into a pension at a lower pension rate than is previously being paid, but this will require the rates on Compass to be updated.
For most dentists, they will see no change in their monthly NHS pension contributions due to the proposed change.
Are there any further consultations planned?
Yes!
The member contribution structure was due to be amended on 1st April 2023 to reduce the number of tiers currently in use. However, the consultation was delayed, but the proposed changes to the member contribution structure will be open to consultation shortly.
This is likely to see those with the highest pensionable earnings see a reduction in monthly pension contributions, while lower earners may see a rise in monthly person contributions.
We can help
If you need guidance on the NHS Pension Scheme, or any other dental financial matter, you can give us a call on 0151 348 8400 or email [email protected].
