The NHS Pension employer contribution has recently changed, and if you are part of the NHS Pension Scheme, you need to be in the know. Here’s how NHS employer contributions work and what the rates currently are.
What are NHS employer contributions?
The NHS Pension Scheme is funded by current members who pay contributions and their employers. The total amount that is contributed varies depending on members’ pay.
The NHS employer contribution rate is set through a process called scheme valuation. A scheme valuation is carried out usually every four years to measure the full cost of paying pension benefits to current pensioners.
What is the current NHS employer contribution rate?
The most recent 2020 scheme valuation concluded that the NHS employer contribution must be increased from 1 April 2024. The employer contribution rate is now 23.7% of pensionable pay, an increase from the previous 20.6%, which was the rate in place from 1 April 2019 to 31 March 2024.
Your employers are responsible for paying 14.38% of your NHS employer contribution, and the remaining 9.4% is funded centrally.
Does the administration levy impact your NHS Pension employer contributions?
In short, no. Employers must pay a scheme administration levy in addition to the NHS employer contribution to cover the cost of scheme admin. The levy is 0.08% of pensionable pay and is collected at the same time as normal employer contributions. Therefore, your employer technically pays 23.78% of pensionable pay, which does not impact your pension pay.
In Scotland the employers contribution is 22.5% and in Northern Ireland it’s 23.2%
Will this NHS employer contribution rate change?
The 2024 scheme valuation is due to commence in 2025, and it will determine the NHS employer contribution rate for the next four years starting on 1 April 2027.
Whether the employer contribution rate increases or decreases is unknown at this time, but Chase de Vere Medical will keep you updated with the changes.
Is the NHS Pension Scheme the right choice for my retirement?
Choosing the right path for your retirement is a personal choice, dependent on your own individual finances and goals.
There’s more to the scheme than NHS employer contributions, and despite recent changes, it offers excellent value for money when it comes to your pension payout and benefits. You can even maximise those benefits by making contributions through paying for Additional Pension via the NHS Pension (Added Benefits-Additional Pension factsheet-20231020.pdf (nhsbsa.nhs.uk)) or pay additional voluntary contributions.
It may help you plan your own retirement strategy and explore all retirement avenues, whether that be creating an investment portfolio or investing in property alongside your NHS Pension.
To help you assess what is best for your financial future or to enquire further about NHS employer contributions and the NHS Pension Scheme, please arrange a consultation with a Chase de Vere independent financial advisor today.
Disclaimer
The information provided herein is based on current tax laws and regulations, which are subject to change.
The Financial Conduct Authority (FCA) does not regulate tax advice.
Please be aware that the value of investments can fall as well as rise, so you could get back less than you invest. Past performance is not a reliable indicator of future results.
The above is not individual financial advice.
Content correct at time of writing.