Govt pushes ahead with NHS Pension scheme changes

The government has confirmed that it will push ahead with its planned changes to the NHS Pension Scheme regulations, with effect from 1 April 2024.

The Department for Health and Social Care (DHSC) previously consulted on plans to permanently remove the pension abatement rules that apply to members who retired early using special class rights, as well as changes to contribution structures and rates.

The government response confirmed that it intends to proceed with a number of the proposals, including plans to implement the second phase of member contribution rate changes and apply an automatic CPI indexation of relevant contribution tier thresholds on 1 April annually.

In addition to this, the DHSC will be pushing ahead with plans to implement a new employer contribution rate of 23.7 per cent, plus the existing 0.08 per cent scheme administration charge.

It will also look to remove permanently the pension abatement rules that apply to members who retired early using special class rights.

Alongside this, it will recognise periods of carer’s leave as an authorised absence from work and treat in the same way as other periods of unpaid authorised absences, as well as allowing 1995 Section members who have reached maximum pensionable service to take partial retirement.

It will also amend the definition of overtime to provide that additional hours worked by members up to full time are pensionable, except where a member has taken partial retirement in the preceding 12 months.

The amendments also include “essential” changes to ensure existing scheme rules continue to operate as intended and accommodate requirements arising from new legislation that abolishes the lifetime allowance.

However, the DHSC opted not to proceed with plans to amend scheme regulations to facilitate the ‘real-time re-banding’ payroll approach to member contribution assessment.

Instead, the department announced plans to launch a further consultation in the spring on the lower-level detail of this approach and supporting regulations, with a view to enabling a 1 April 2025 common implementation for ESR and broader range of payroll providers.

Scheme administrator, NHS Business Services Authority (NHSBSA), is expected to write to all members informing them of the changes.

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