Consultation outcome

NHS Pension Scheme: member contributions phase 2 and miscellaneous amendments

Updated 22 February 2024

Applies to England and Wales

Introduction

The NHS Pension Scheme is designed to offer significant value in retirement to people who have chosen to dedicate part or all of their careers to serving the public through the NHS. Backed by the Exchequer, the NHS Pension Scheme offers the security of a guaranteed income in every year of retirement for its contributing members, on some of the most generous terms available from a pension scheme.

The legal framework for the NHS Pension Scheme

There are 2 NHS Pension Schemes:

• the new reformed 2015 Scheme
• the older, closed scheme which divided into the 1995 and 2008 Sections

Accordingly, there are 3 sets of NHS pension regulations under which entitlement to pension and other benefits are calculated:

• The National Health Service Pension Scheme Regulations 1995 (SI 1995/300) (the ‘1995 regulations’)
• The National Health Service Pension Scheme Regulations 2008 (SI 2008/653) (the ‘2008 regulations’)
• The National Health Service Pension Scheme Regulations 2015 (SI 2015/94) (the ‘2015 regulations’)

Proposed changes to scheme rules

The Department of Health and Social Care (DHSC) keeps the rules of the pension scheme under review to ensure it continues to help the NHS attract and retain the staff needed to deliver high quality care for patients. The changes proposed in this consultation document are split into the following sections:

• changes to the member contribution structure from 1 April 2024
• changes to the employer contribution rate from 1 April 2024
• changes to abatement provisions for special class status (SCS) members in line with the Agenda for Change (AfC) pay award for 2023 to 2024, and further changes to death in service benefits for SCS members
• changes to scheme access policy
• changes to carer’s leave policy in line with the Carer’s Leave Act 2023

Consultation process

DHSC welcomes views on the proposals set out in this document to amend NHS Pension Scheme regulations.

This consultation document sets out proposed changes on multiple elements of NHS Pension Scheme regulations. At the end of each section, consultation respondents are invited to provide their views in response to questions on each specific element of the changes.

Reforming member contributions: phase 2

Background

The NHS Pension Scheme is a valuable and valued part of the reward package for NHS staff, helping employers recruit and retain their workforces. It is one of the best pension schemes available, providing generous retirement and life assurance benefits including a retirement lump sum (optional in some cases), an annual pension that increases yearly in line with price inflation and pensions for a surviving partner and dependants.

The scheme is contributory. Members and their employer are required to pay towards the cost of benefits they build up in the scheme. An actuarial valuation is conducted every 4 years to ensure the level of contributions made by members and employers meet the full cost of their pension rights as they accrue them.

At present employers contribute 20.6% of each member’s pensionable earnings towards the cost of scheme benefits, with changes expected from 1 April 2024. Employers also pay a charge of 0.08% to fund the administration of the scheme. Members are required collectively to contribute 9.8% across the whole scheme membership. This is known as the member contribution ‘yield’.

While the yield is a fixed percentage, there are a range of approaches that could be taken to ensure that 9.8% is collected from across the whole scheme membership. The simplest method is to ask each member to contribute a flat rate of 9.8%. An alternative is to share out the 9.8% requirement across the workforce by charging a sliding scale of rates to members according to their pensionable earnings. The aggregate amount collected across members adds up to 9.8%. This approach is known as ‘tiered contributions’ and is the method adopted across all public service pension schemes with the exception of the non-contributory Armed Forces Pension Scheme.

Tiering has allowed the NHS Pension Scheme to reduce potential financial barriers and encourage all staff to participate in the generous pension scheme that is a major component of the NHS reward package and not miss the opportunity to make good quality provision for their retirement. It is intended as a mutual scheme for the whole NHS sector. The NHS workforce encompasses a broad range of professions and occupations with a wide difference in earnings - from porters and healthcare assistants to senior nurses and doctors. Tiering has also allowed the scheme to recognise through higher contribution rates the beneficial effect of income tax relief on contributions and the additional value that higher earners tend to achieve from pension benefits built up under the ‘final salary’ accrual method that is a feature of the older legacy scheme.

Tiering has helped deliver the following shared priorities that underpin the current approach to member contributions:

• include protections for the lower paid
• minimise the risk of opt-outs from the scheme across the whole membership
• ensure that the scheme remains sustainable and a valuable part of the reward package and affordable to all members

Both the department and the NHS Pension Scheme Advisory Board (SAB), comprising trade union and employer representatives, remain committed to these principles. SAB advises the Secretary of State for Health and Social Care on the merits of making changes to the NHS Pension Scheme.

Changes to member contributions

The contribution structure is currently being reformed following a comprehensive review in 2021. The review was conducted following recommendations provided by SAB, who reached full agreement that:

• the principles underpinning the previous contribution structure should be retained, including protection for the lower paid
• the risk of opt-outs should be minimised
• work should be done to ensure the scheme remains a sustainable and valuable part of the NHS total reward offer
• ‘cliff edges’ in the contribution structure should be resolved
• there was a pressing need to explore ways to minimise scheme opt-outs and mitigate other issues caused by the impact of pension taxation
• a move to use actual pay, rather than whole-time equivalent (WTE) pay, to determine contribution rates would be appropriate

From 1 October 2022, the department introduced changes to the member contribution structure, including changing the amount that members pay for their pension benefits. This was the subject of a previous consultation, NHS Pension Scheme: proposed changes to member contributions. It was agreed as part of this consultation process that the reforms to member contributions would be implemented over 2 phases to give members time to adjust to the changes.

The previous consultation delivered what is known as phase 1 of the changes to member contributions. The department received advice and recommendations of the SAB, and the previous consultation process resulted in a statutory instrument which made changes to:

• calculate member contribution rates based on actual pay instead of notional WTE pay
• amend the structure for member contributions and the amount of contributions payable by different cohorts of members
• amend scheme regulations so that the member contribution tier thresholds could be annually increased in line with AfC pay awards

Further detail on the review of member contributions to the point of the delivery of phase 1 is in the previous consultation document.

Phase 1 put in place an interim structure that has since been uprated from 1 April 2023 in line with the AfC pay award for England for 2023 to 2024. We now intend to take the next step and implement phase 2 from 1 April 2024. This will conclude the review of member contributions and complete the move to the new tiers and rates.

Under the new structure, the number of tiers and range between the lowest and higher tier was reduced. This also meant that the gap between some tier boundaries was reduced. As part of the previous consultation process, it was agreed that the move to implement the final updated member contribution structure would be staggered over 2 phases in order to give members time to adjust.

This consultation sets out proposals to deliver the agreed contribution structure and some additional changes to member contributions from 1 April 2024, in what is known as phase 2 of the member contributions review.

Our previous experience of phase 1 indicated areas for additional change and improvement that were not included in the phase 1 consultation package. These items are the introduction of futureproofing, real-time re-banding and the removal of the lowest tier in line with planned changes by HM Revenue & Customs (HMRC). These areas are set out in further detail in the following sections.

Current rates

In common with other public service pension schemes the NHS Pension Scheme applies a tiered contribution approach. Pensionable pay amounts are grouped into tiers and a contribution rate is set for each tier. The member pays a contribution rate based on their actual pensionable pay. The following table shows the member contribution structure that has been in place since the phase 1 changes from 1 October 2022, with thresholds uplifted as of 1 April 2023 in line with the 2023 to 2024 AfC pay award for England:

Table 1: member contribution structure since 1 October 2022

Tier	Pensionable earnings (rounded down to the nearest pound)	Contribution rate from 1 April 2023
1	Up to £13,246	5.1%
2	£13,247 to £17,673	5.7%
3	£17,674 to £24,022	6.1%
4	£24,023 to £25,146	6.8%
5	£25,147 to £29,635	7.7%
6	£29,636 to £30,638	8.8%
7	£30,639 to £45,996	9.8%
8	£45,997 to £51,708	10.0%
9	£51,709 to £58,972	11.6%
10	£58,973 to £75,632	12.5%
11	£75,633 and above	13.5%

Proposed changes to member contributions

This chapter sets out the proposed changes to the member contribution structure to be implemented from 1 April 2024. The changes are split into 4 sections, as follows:

• implementation of updated member contribution structure as agreed during the phase 1 consultation, with the additional proposed removal of the bottom tier
• futureproofing of the member contribution structure
• real-time re-banding
• changes to the pensionability of overtime up to whole time for members who work part time

Each of the following sections sets these items out in greater detail and invites consultation respondents to contribute their views.

The implementation of the updated member contribution structure as agreed during the phase 1 consultation is not subject to further views, as it has already been agreed. This consultation seeks views from stakeholders on the remaining elements above, which are set out in greater detail in the following sections.

The previous consultation set out the contribution rates following the implementation of phase 2. However, these contribution rates were assigned to the member contribution thresholds as they stood in February 2022. In the intervening time, the member contribution thresholds in the NHS Pension Scheme have been increased twice in line with successive AfC pay awards for England. This means that the updated member contribution structure from 1 April 2024 has increased thresholds compared to the previous consultation to ensure members continue to receive the full benefit of the value of the AfC pay awards from 2022 to 2023 and 2023 to 2024.

In line with what was agreed in the previous consultation, the member contribution structure from 1 April 2024 is outlined in table 2.

Table 2: proposed NHS Pension Scheme member contribution threshold structure from 1 April 2024 to 31 March 2028 (before any future increases in thresholds in those years)

Pensionable earnings thresholds	Contribution rate from 1 April 2024
Up to £13,246	5.2%
£13,247 to £25,146	6.5%
£25,147 to £30,638	8.3%
£30,639 to £45,996	9.8%
£45,997 to £58,972	10.7%
£58,973 and above	12.5%

Implementation of updated member contribution structure and future reconsideration of the first tier

The previous phase 1 consultation set out proposals to reduce the overall number of contribution tiers, and also to reduce the range between the contribution percentage paid by the lowest and highest tiers. Taken together, this means that members on the whole move closer to paying the required 9.8% yield, but lower earners continue to benefit from a reduced rate in order to encourage participation. This also means that the gaps between contribution tiers are lessened, which helps to deliver the commitment to reduce the impact of ‘cliff edges’ in the member contribution structure.

Under the current member contribution structure, and the updated structure proposed in the previous consultation, the first tier is additionally discounted to reflect that those with NHS earnings (and no additional income) at that level do not benefit from net pay tax relief on pension contributions because their earnings are within the personal allowance. Under the current structure, members earning below the personal allowance have their contributions discounted from 5.7% to 5.1% to provide the net benefit of tax relief on contributions. The previous consultation set out that under the proposed phase 2 structure members with total taxable earnings under the personal allowance would have their contribution rate discounted further from 6.5% to 5.2% to provide a continuation of this benefit.

However, the department is aware of upcoming government changes led by HMRC which will provide top-up payments to eligible individuals who have contributed to a net pay pension scheme and have total taxable income below the personal allowance. Further information on the implementation and operation of these changes can be found in a policy paper from HMRC. The measure will come into force for contributions made in the tax year 2024 to 2025, with payments being made as soon as possible after the tax year in which the contribution is paid ends. The payments will be chargeable to income tax.

The purpose of these payments is to ensure equal tax relief is provided to members of all occupational pension schemes, regardless of how their scheme applies tax relief. Currently, members of schemes which use relief at source (RAS) arrangements receive a 20% top-up on their pension saving regardless of whether their earnings are within the personal allowance, while those in net pay schemes (such as the NHS Pension Scheme) receive tax relief at their marginal rate. This means that members with total taxable earnings within the personal allowance receive 0% tax relief, and that such members in net pay schemes have less take home pay than comparative members of RAS schemes. As explained above, the first tier in the member contribution structure was designed to provide a rate that was further subsidised to mirror the benefit of tax relief.

The purpose of the planned government changes is to rectify the anomaly in tax relief between net pay and RAS schemes for members with earnings below the personal allowance. As a result of the changes, members across all occupational pension schemes with total taxable earnings within the personal allowance should receive similar outcomes regardless of how their pension scheme is administered for tax purposes.

Legislation to proceed with these changes has now received Royal Assent. The expectation is that top-up payments will be made from the 2025 to 2026 tax year in respect of net pay contributions made in the previous (2024 to 2025) tax year, and will be based on an individual’s total taxable income in that previous tax year. HMRC is currently developing the processes for identifying eligible individuals and making top-up payments. Where HMRC identifies that a top-up payment is due, they will contact eligible individuals to obtain details so that the top-up payment can be made directly to the individual. Timings for the top-up payments may vary depending on the individual’s circumstances, such as whether they are also in tax self-assessment. For NHS Pension Scheme purposes, the vast majority of affected members will only be on Pay As You Earn (PAYE).

In light of these developments, the department considers that it may be appropriate to remove the first NHS Pension Scheme contribution tier at a future point to align with the introduction of the top-up payments. The department recognises the importance of aligning any future removal of the first tier to coincide with the introduction of the top-up payments to ensure that members with total taxable earnings below the personal allowance do not temporarily experience a reduction in take home pay as a result of the subsidised contribution rate being removed before the top up is payable.

These changes are not proposed for 1 April 2024, but they are outlined in this consultation in order to gather views from stakeholders. The department will use those views to assess the case for removing the first tier at a later point once the top-up payments are in effect.

Question

Do you agree or disagree with the principle to remove the first tier of the NHS Pension Scheme member contribution structure at a future point?

This tier provides a subsidised contribution rate to members who do not qualify for tax relief. We are seeking views on the principle to remove it at the point that HMRC begins to make top-up payments directly to eligible members to provide the benefit of tax relief directly.

• Agree
• Disagree
• Don’t know

If you disagree or don’t know, please explain your answer.

Improving the process of indexing the contribution thresholds

In successive years, the member contribution tier thresholds in the NHS Pension Scheme have been increased in line with the value of the AfC pay award for England. The purpose of this is to avoid an increase to pensionable pay due to the annual pay award unintentionally resulting in a take-home pay reduction. This could occur in situations where a member is close to a contribution tier boundary and receives a pay award that tips them into a higher tier. If the value of the jump between contribution rates is greater than the percentage value of the award, the member would have a temporary reduction in take-home pay. Even if the value of the pay award was greater than the increase in member contributions, members would still receive less than the full value of the pay award as a result of paying increased contributions. Therefore, increasing thresholds in line with the AfC pay award for England ensures that members receive the full value of the award and reduces the possibility that members will move into a higher contribution tier solely as a result of receiving the pay award.

The department consulted and then legislated on proposals to increase member contribution thresholds in line with the AfC pay award for England in May 2023, with the changes having backdated effect to 1 April 2023 in line with the implementation of the pay award.

As part of that consultation process SAB expressed concerns in their feedback that there was a need to act quickly, in order to ensure that the implementation of the new member contribution structure aligns with the implementation of the pay award to avoid a position where members temporarily have the value of an award eroded by increased pension contributions.

Under the current process, the department is required to conduct a public consultation process and lay a statutory instrument in the time between the AfC pay award being agreed by the NHS Staff Council and the start of the award being paid to staff. In 2023, the pay award was agreed by the NHS Staff Council on 2 May and became payable in June. For staff who are paid weekly, the award became payable in early June. This creates a clear risk that the threshold uplifts cannot be delivered in time for the implementation of the award. In light of this, the department committed to working with SAB to consider ways in which this process for uplifting thresholds in line with the pay award can be streamlined or improved in future years.

An indexing solution would mean that contribution thresholds could be changed without the need to directly amend scheme regulations. This would greatly improve the efficiency of the process for uplifting contribution thresholds in future years, which will provide certainty to members regarding their payable contributions. As highlighted in our previous consultation process to increase thresholds in line with the 2023 to 2024 AfC pay award for England, there is a clear risk that the current process of laying a statutory instrument in response to the completion of each pay award cannot be completed in sufficient time to align with the implementation of the award. This would create a scenario where some members temporarily have the value of the award eroded by increased pension contributions, which would undermine confidence in the award. This is particularly true where staff are paid weekly and are therefore likely to receive the pay award very soon after it is agreed.

To address this, we propose to amend regulations to insert a clearly defined process for implementing an annual threshold uplift which can be applied without the need for a further statutory instrument each year. In determining the preferred approach, the department will follow the following principles:

• the need to promote stability in scheme administration and the collection of contributions
• the need to ensure the fairest outcome for all members when applying the index
• the need to implement a system for indexing which is transparent and can be delivered in a timely fashion

With these principles in mind, the department proposes the following 2 options.

Option 1: automatically increase thresholds in line with the consumer price index (CPI)

A proposed approach is to index contribution thresholds in line with the rate of the CPI from the previous September. A similar approach has already been adopted in the Civil Service Pension Scheme (CSPS) and Teacher’s Pension Scheme (TPS). Uplifting thresholds in line with CPI has the benefit of being somewhat more straightforward than the current approach because the uplift would be applied from 1 April each year based on the rate of CPI from the previous September. This provides a much greater period of time between the value of the index becoming known and it being applied to thresholds, compared to the current process of applying an uplift in line with the value of the AfC award for England as quickly as possible after the award is agreed.

CPI is also a singular figure that would be applied evenly to all NHS Pension Scheme member contribution thresholds. This avoids the potential added complexity that could occur with AfC uplifting, as it is possible that the AfC award may result in unequal uplifts to thresholds if, for example, the pay award is targeted at lower AfC bands. If the thresholds for the lower tiers of the member contribution structure are consistently uplifted by a greater percentage than the higher tiers, the overall member contribution structure would become compressed.

The department is also aware of concerns from staff-side SAB representatives that the current process of uplifting thresholds in line with the AfC award for England may produce inconsistent outcomes for members who receive a different pay award. The department view is that the AfC award for England is the most appropriate of the pay awards to uplifts thresholds in line with. However, CPI indexing offers a neater solution to this issue by uplifting all thresholds in line with an index which is separate to the value of individual pay awards.

Under this option, the member contribution structure would be set for the period 2024 to 2025, to 2027 to 2028 scheme years (that is, 1 April 2024 to 31 March 2028) and contribution thresholds would be uplifted annually in line with CPI without the need for further amendments to scheme regulations.

Option 2: continue with the current process of manually uplifting thresholds in line with the AfC award but observe the required Parliamentary conventions

An alternative approach is to continue the process of amending regulations to manually uplift thresholds each year in line with the AfC pay award for England. This has happened previously in successive years.

It is not appropriate to automate this process due to the potential added complexity of the AfC award for England compared to CPI. For example, the value of the AfC award may be applied differently to different AfC bands if pay is targeted. This means the scheme would be required to adjust threshold increases to account for areas of higher pay increase. There would therefore be a corresponding lack of certainly going forward in this method, compared to CPI, where the legislation could clearly set out that a single CPI figure is to be applied all bandings and there would be no need for any added calculation or process in between the index figure and the impact on the actual thresholds.

Going forward, if this became the settled option the department would also be required to observe the required Parliamentary conventions to apply the threshold uplifts. This means it would not be possible to expedite the process of uplifting thresholds to ensure they are uplifting in time for the value of the pay award becoming payable. As a consequence, members would likely temporarily pay increased pension contributions in the first pay periods following the introduction of a pay award.

We anticipate it would take at least 2 months between the pay award being agreed and the uplifted thresholds being applied. Depending on the specific timings each year, this would mean disruption to 2 monthly pay periods following the introduction of the pay award. This is due to the time required following the agreement of the pay award to follow the appropriate Parliamentary conventions to amend regulations, and also to allow the Electronic Staff Record (ESR) the required time to build the uplifted thresholds into the system and distribute the new structure to employers.

The department considers that it is preferable to index thresholds to CPI rather than continuing the process of manually uplifting thresholds in line with the AfC award for England. As set out above, uplifting thresholds in line with AfC automatically may be less well targeted and lead to unintended outcomes compared to CPI.

Given the clear need to automate the process for threshold uplifts, in light of the risks discussed earlier in this section, the department considers that option 1 is the preferred and deliverable solution. Indexing thresholds in line with CPI provides greater clarity for members as thresholds would be uplifted from 1 April based on the CPI figure from the previous September. This provides time for the scheme to make available clear guidance in advance of 1 April each year confirming the new thresholds which will apply. Automating this process also removes the difficult timings associated with the current process.

Question

Do you agree or disagree that uplifting thresholds in line with CPI and automating the process is a suitable approach which complies with the principles outlined in this section?

• Agree
• Disagree
• Don’t know

If you disagree or don’t know, please explain your answer.

Question

Do you agree or disagree with the proposal to set the contribution threshold for the next 4-year valuation period (2024 to 2025, to 2027 to 2028 scheme years)?

• Agree
• Disagree
• Don’t know

If you disagree or don’t know, please explain your answer.

While we would broadly expect total pensionable pay to rise in line with CPI, meaning that indexing to CPI places no financial pressure on the scheme, freezing the entry point to the highest contribution tier (for members earning over £58,973) would further secure the financial stability of the collected yield. There is a rationale for freezing the entry point to the top tier should member contribution yield be expected to fall short in future, given the freezing of the higher rate income tax threshold until 2027 to 2028, which means that members in this tier will pay a relatively low net contribution rate due to receiving tax relief at a higher rate.

A key principle of progressive tiering is that members who earn more pay more for their pension benefits in order to encourage scheme participation across the workforce. Freezing the entry point to the top tier would have the long-term effect of smoothing the net contribution rates paid by members across the structure. The government will keep the impact of automated indexing under review.

Question

Do you agree or disagree with the suggestion to freeze the entry point to the top tier of the member contribution structure?

This tier is occupied by members who receive the benefit of higher rate tax relief on their pension contributions. We are seeking views on the principle of removing this tier as the default lever to ensure the scheme continues to collect the 9.8% contribution yield.

• Agree
• Disagree
• Don’t know

If you disagree or don’t know, please explain your answer.

Real-time re-banding

Phase 1 of the member contributions review delivered a change to calculate member contribution rates based on actual earnings rather than notional WTE earnings. This ensured that members paid a contribution rate that was more reflective of their pensionable pay and benefit accrual for that scheme year, particularly given that all active NHS Pension Scheme members accrue benefits in the 2015 Scheme from 1 April 2022. Unlike the legacy scheme which provides final salary benefits, the 2015 Scheme provides career average revalued earnings (CARE) benefits and therefore paying contributions based on actual earnings is a more accurate approach to take.

Building on this rationale, alongside the phase 2 contribution rates and tiers we intend to introduce real-time re-banding of member contributions from 1 April 2024. Some NHS staff have pensionable pay which fluctuates between pay periods. For NHS Pension Scheme purposes, the frequency at which a member is paid is known as their pay period. At the start of each scheme year, officer members have their member contribution rate calculated based on their pensionable pay figure from the previous year. Scheme regulations require that if a member’s rate of pensionable pay changes during the scheme year they will pay a recalculated contribution rate from the start of the next pay period.

The current mid-year reassessment process conducted by the scheme will automatically assess certain permanent changes in pensionable pay such as a grade change and apply a new member contribution rate if required from the start of the next pay period. However, fluctuating pensionable pay such as that caused by varying shift patterns requires employers to make a manual reassessment of member contributions and assign a new rate in the following pay period. This process may vary by local employer and the aim of real-time re-banding is to both standardise and automate practices to reduce the administrative burden on employers who use the national ESR payroll system.

Under real-time re-banding, ESR will provide employers with the member contribution structure applicable under each pay period. For example, annual thresholds are divided by 12 for monthly pay periods and divided by 52.1428 for weekly pay periods. 

The department is aware that a number of employers in the NHS Pension Scheme, particularly those in primary care, do not use the ESR. This consultation seeks their views on whether they are able to implement real-time re-banding as described in this section. The department proposes to amend regulations to implement real-time re-banding for employers who can deliver it via ESR from 1 April 2024. However, the existing regulations which allow employers to apply a new contribution rate from the start of the next pay period will remain.

The intention of real-time re-banding is to automate the process of updating member contribution rates for members who have fluctuating pensionable pay that causes them to frequently cross tier boundaries. Assigning an updated contribution rate in the period that pay changes also ensures that members pay a more accurate contribution rate which better reflects their pensionable pay. This will produce a fairer and more consistent outcome for members.

The following tables demonstrate the mechanism to apply real-time re-banding to the member contribution structure.

Table 3: real-time re-banding tier thresholds by pay frequency

Pensionable earnings thresholds	Contribution rate from 1 April 2024	Annual tier threshold	Monthly threshold	Weekly threshold	Fortnightly threshold	Lunar threshold
Up to £13,246	5.2%	£13,246.99	£1,103.92	£254.06	£508.11	£1,016.21
£13,247 to £25,146	6.5%	£25,146.99	£2,095.59	£482.28	£964.55	£1,929.09
£25,147 to £30,638	8.3%	£30,638.99	£2,553.25	£587.60	£1,175.20	£2,350.40
£30,639 to £45,996	9.8%	£45,996.99	£3,833.09	£882.14	£1,764.28	£3,528.55
£45,997 to £58,972	10.7%	£58,972.99	£4,914.42	£1,131	£2,261.99	£4,523.97
£58,973 and above	12.5%	No upper limit	No upper limit	No upper limit	No upper limit	No upper limit

Question

Do you agree or disagree that the introduction of real-time re-banding would produce a more accurate outcome for the calculation of member contribution rates?

Real-time re-banding will assign an updated pension contribution rate in the pay period where pay changes for members with pensionable pay which fluctuates between pay periods.

• Agree
• Disagree
• Don’t know

If you disagree or don’t know, please explain your answer.

Question

Are you responding as or on behalf of a non-ESR payroll provider?

• Yes
• No

If you said yes, do you have the capacity to implement real-time re-banding?

• Yes
• No
• Don’t know

If you said no or don’t know, please explain why.

Changes to the pensionability of overtime for staff who work part time

Under the 2015 regulations, overtime is non-pensionable and is defined as:

Any period of time worked in excess of the lesser of –          

a. The period of time for which the person has contracted to work in the ordinary course of events; or

b. Such period of time as the scheme manager determines a person engaged in similar employment would reasonably be contracted to work in the ordinary course of events.

This means that for part-time staff, overtime is considered to be any hours worked in excess of contracted hours. This applies regardless of whether additional hours worked are paid at plain or premium rate. For part-time staff, hours up to 37.5 hours per week are paid at plain time, and hours in excess of 37.5 hours per week are paid at premium rate. For staff who work full time, overtime is considered to be hours worked in excess of 37.5 hours per week and is typically paid at premium rate.

There is therefore a historical gap in the interpretation of overtime worked up to whole time for staff who work part time. Longstanding practice in the 1995 and 2008 NHS Pension Scheme was to allow additional hours to be pensioned up to whole-time equivalent. The department proposes to amend the definition of overtime in 2015 regulations to insert the flexibility that existed in the 1995 and 2008 Sections. This means that staff who work part time can pension overtime worked up to 37.5 hours per week. Any overtime worked above 37.5 hours per week, for both part-time and full-time staff, will remain non-pensionable.

On 1 October 2023, the department introduced a new partial retirement option for members of the 1995 Section of the NHS Pension Scheme. This facility allows members to partially retire and claim up to 100% of their 1995 Section benefits while continuing to work and accrue further pension in the 2015 Scheme. The availability of partial retirement is intended to better support members’ work-life balance around retirement and may also help the NHS to retain valued experienced staff in the workforce.

Members who take partial retirement are required to reduce their pensionable pay by at least 10% for the 12 months following partial retirement. For GPs, a 10% reduction in commitment is required.  

In some cases, where the employer and employee agree that the individual should continue to work in the same role, with no reduction in working hours, commitments or responsibilities, employers may review the structure of the employee’s remuneration to achieve the 10% reduction in pensionable pay.

For example, this could be achieved by reducing an employee’s core pensionable contract and the employee working discretionary, non-pensionable overtime.

We therefore also intend to insert a mechanism into the definition of overtime which confirms that any overtime or additional hours worked by staff who have partially retired within the previous 12 months is non-pensionable. This includes all additional work above their contracted hours. This facility is important for members who take partial retirement but wish to continue working at 100% capacity. They would achieve this by reducing their contracted hours by at least 10% following a partial retirement election and continuing to work additional sessions up to 100% as non-pensionable overtime.

Question

Do you agree or disagree with the proposal to amend the definition of overtime?

This will allow staff who work part time to pension additional income up to whole time, with limitations where members have partially retired in the previous 12 months?

• Agree
• Disagree
• Don’t know

If you disagree or don’t know, please explain your answer.

New employer contribution rate following scheme valuation 

A valuation of the NHS Pension Scheme was completed on 19 October 2023 (the ‘2020 valuation’). This valuation is an actuarial assessment of past and future pension benefits building up within the scheme and is carried out on a 4-year cycle. The results are used to determine the employer contribution rate required to meet current and projected scheme liabilities.

Current employer contribution rate

Employers currently pay 20.6% of a member’s pensionable pay towards the cost of pension rights they build up (plus an administration charge of 0.08%). This employer rate came into force on 1 April 2019 following the 2016 valuation, which required the employer contribution rate to increase from 14.3% to 20.6%.

To alleviate cost pressures on employers as a consequence of this increase, since 1 April 2019, up to 6.3% of the employer contribution owed has been paid to the scheme administrator (the NHS Business Services Authority (NHSBSA)) centrally by either NHS England or DHSC depending on how the employer is funded. All employers are directly invoiced for a contribution of at least 14.3% of pensionable pay.

New employer contribution rate from 1 April 2024

Results from the 2020 valuation show an increase in benefit costs, requiring a 3.1 percentage point rise in the employer contribution rate to 23.7%. This figure has been confirmed by the Government Actuary’s Department in their final 2020 valuation report. The net increase in benefit costs is driven by a reduction in the SCAPE discount rate used to set contribution rates for unfunded public service pension schemes. The SCAPE rate is set by HM Treasury and is the notional investment return on contribution income received. (SCAPE stands for superannuation contributions adjusted for past experience.)

HM Treasury ministers announced in March 2023 an intention to implement on 1 April 2024 the new employer rates for public service pension schemes arising from this round of valuations. 

Consequently, we propose amending the 2015 regulations (regulation 33) to replace the current employer contribution rate with the new rate of 23.7% effective from 1 April 2024.

Funding support

As set out in its SCAPE consultation response, the government has committed to provide funding for increases in employer contribution rates resulting from 2020 valuations as a consequence of changes to the SCAPE discount rate. For the NHS Pension Scheme valuation the full 3.1% increase is a consequence of these SCAPE discount rate changes.

The funding support commitment is for employers whose employment costs are centrally funded through departmental expenditure. This covers the vast majority of organisations employing NHS Pension Scheme members. All employers will receive some funding support. Most employers will receive funding for the full 3.1% increase, with the exception of medical schools who will receive 2.64% to reflect the fact that a portion of their employment costs are funded through routes other than the NHS or central government.

 DHSC will distribute this additional funding support via the existing central channels. This means that the percentage of pensionable pay for which employers are directly invoiced by NHSBSA will not change on 1 April 2024, with the exception of medical schools. NHS England or DHSC will pay NHSBSA centrally for the 3.1% increase, or 2.64% for medical schools. 

This funding commitment, and the central funding arrangement that has operated since its introduction on 1 April 2019, extends to budgets agreed in the Spending Review 2021 and will be reviewed as part of the next spending review. 

Question

If you have any further comments on the proposed increase to the employer contribution rate from 1 April 2024, please outline them.

Abatement for pensions for special class members who return to work

Background

For most staff, the NHS Pension Scheme does not place any limits on the amount that staff can work should they return after claiming their benefits. However, abatement has historically applied to special class status (SCS) members who return to work between age 55 and 60 in receipt of an unreduced pension.

The normal pension age (NPA) for members of the 1995 Section is 60. However, some members are eligible to retire earlier if they hold SCS. SCS is a preserved right awarded to certain professions in the 1995 Section, which, subject to qualifying criteria being met, allows a member to retire at 55 instead of 60 without an actuarial reduction in benefits that would normally apply when claiming benefits early. It was withdrawn for new entrants from 6 March 1995 as part of the NHS Pension Scheme restructuring at that time.

In order to qualify for SCS, a member must have:

• been in pensionable employment as a nurse, physiotherapist, midwife or health visitor on or before 6 March 1995
• not had a break in pensionable employment of 5 years or more
• spent the last 5 years of their pensionable employment prior to retirement as a nurse, physiotherapist, midwife or health visitor

SCS allows members to retire at 55 instead of 60 without the actuarial reduction to their pension that would apply to other members who claim their benefits early. Historically, under normal arrangements SCS members who return to work between age 55 and 60 are subject to abatement. This means that their pension plus salary cannot exceed their pre-retirement income, and their pension is reduced if it does.

For members with long careers, the abatement ceiling has previously prevented them from working more than half time in the week should they return to work before age 60.

The response to the COVID-19 pandemic placed unprecedented pressure on the NHS workforce. To help boost capacity on the frontline, the abatement rules were relaxed to encourage retired and partially retired staff to return to work or increase their working commitments. SCS abatement was therefore suspended via section 45 of the Coronavirus Act 2020, and was an important means of generating extra workforce capacity from partially retired staff during the pandemic response.

The additional capacity provided from the suspension of abatement continued to help the delivery of the vaccine rollout and it also supports the NHS during the elective recovery period. On that basis, the suspension of abatement was extended to 31 March 2025 as announced in Our plan for patients.

Proposed change

As part of the AfC pay deal for 2023 to 2024, the government outlined its intention to further support retention measures by permanently removing SCS abatement. Our intention is therefore to amend NHS Pension Scheme regulations as part of the planned statutory instrument for 1 April 2024. This will have the effect of permanently removing SCS abatement from scheme regulations.

The removal of abatement is important in the context of the delivery of NHS services. SCS abatement is currently suspended to 31 March 2025 and permanently removing it ensures a continued capacity boost beyond that point because members can continue to work above their abatement ceiling.

It is also important to note that SCS abatement applies only to a small and reducing cohort of members who qualify for SCS. In order to be affected by the proposal to permanently remove abatement, members must qualify for SCS and be below age 60 from 1 April 2025.

As the government committed to removing abatement permanently, as part of the collective agreement reached with the NHS Staff Council, this consultation seeks views on the timing and approach in scheme regulations to achieve this outcome.

Subject to Parliamentary approval, the department intends to amend the 1995 NHS Pension Scheme regulations to permanently remove the SCS abatement mechanism.

Question

Do you agree or disagree that the proposal to amend NHS Pension Scheme regulations has the intended effect of permanently removing abatement for SCS members, as agreed in the AfC pay deal for 2023 to 2024?

• Agree
• Disagree
• Don’t know

If you disagree or don’t know, please explain your answer.

Miscellaneous and consequential amendments

A number of miscellaneous and consequential amendments are proposed as part of this consultation. They are explained in further detail in the following sections.  

Carer’s leave

The government’s 2019 manifesto committed to introduce one week of leave for unpaid carers. The government consulted on proposals for carer’s leave from March to August 2020, and the response to this consultation was published in September 2021.

The Carer’s Act 2023 received Royal Assent in May 2023. Carer’s leave will introduce a further degree of flexibility for working unpaid carers by giving employees the right to be absent from work to fulfil their caring responsibilities. This will go some way to relieving the stress of needing to take time out of work to care. There is currently no dedicated statutory leave entitlement for informal carers who rely other means (for example, annual leave or informal arrangements with their employer) to give them the flexibility they need to be able to balance work and caring.

The key elements of the entitlement are as follows:

• day 1 right for employees providing care for a dependant with a long-term care need
• one week of unpaid leave per employee, per year (pro-rated for those with different working patterns)
• available for the purpose of providing care or making arrangement for the provision of care
• available to take very flexibly (that is, from a half day up to a block of one week)
• no evidence requirements to demonstrate how leave is used, or who it is used to care for, minimising red tape on individuals and employers
• minimum notice requirements, in line with the existing approach to annual leave (twice the length of time being requested, plus 1 day) subject to a 3-day minimum notice period
• employers will have the ability to postpone, but not to deny a request to take carer’s leave - where the employer considers the operation of their business would be unduly disrupted as a result of the leave being taken on the requested dates

The department proposes to make amendments to NHS Pension Scheme regulations to insert a deeming provision for members who take unpaid carer’s leave. The deeming provision will ensure that members who take carer’s leave will continue to accrue pension membership during the time that they are absent from work. During the period of carer’s leave, the employer will continue to pay contributions based on the member’s substantive pensionable pay (their deemed pay), and the member will pay any owed member contributions upon their return to work.

The proposed treatment of carer’s leave is consistent with the existing approach to other authorised absences from work, some of which may be unpaid, such as maternity leave.

Question

Do you agree or disagree with the proposals to make consequential amendments to NHS Pension Scheme regulations to provide a deemed pay figure to members who take unpaid carer’s leave?

• Agree
• Disagree
• Don’t know

If you disagree or don’t know, please explain your answer.

Abolition of the lifetime allowance

The government consulted on draft clauses for the Finance Bill 2023 to 2024 between 18 July and 12 September 2023. Subject to the bill becoming an act of Parliament, we propose making consequential changes to the 1995 regulations, the 2008 regulations, the 2015 regulations and the transition regulations to ensure compliance with the Finance Act.

See information on the proposed draft clauses for:

• the Finance Bill 2023 to 2024
• the abolition of the lifetime allowance

Changes to scheme regulations

Subject to the bill becoming an act of Parliament, we intend making consequential amendments to the 1995, 2008 and 2015 scheme regulations. These amendments will update relevant definitions or terminology, and preserve existing provisions relating to the lifetime allowance to the extent that they apply prior to abolition. The intention is to ensure the smooth operation of legacy and any future lifetime allowance requirements post-abolition.

Question

Do you agree or disagree with the proposal to amend NHS Pension Scheme regulations with the intended effect of removing reference to the lifetime allowance?

• Agree
• Disagree
• Don’t know

If you disagree or don’t know, please explain your answer.

Partial retirement: maximum service

On 1 October 2023, the department introduced a new partial retirement option for members of the 1995 Section. This flexibility allows staff to partially retire and claim some or all of their pension, while continuing to work and accrue further pension in the 2015 Scheme. However, the existing regulations do not permit members of the 1995 Section who have breached the maximum service limits to partially retire.

To complete the package of retirement flexibilities we intend to amend scheme regulations to make the existing partial retirement option available to members of the 1995 Section who have breached the maximum service limits. At the moment, these members are not permitted to access partial retirement, but they can claim their benefits and join the 2015 Scheme if they later return to work. This is known as ‘retire and return’.

Although retire and return provides these members with a similar option in terms of pension accrual, we understand that this process may not be as seamless as taking partial retirement, because this does not require members to resign from their jobs.

We are therefore proposing to amend the 1995 Section regulations to allow maximum service members to access partial retirement from 1 April 2024.

Partial retirement: salary sacrifice 

Members who take partial retirement are required to reduce their pensionable pay by at least 10% for the 12 months following partial retirement. For GPs, a 10% reduction in commitment is required. The regulations state that in order to access partial retirement, a member must have a reduction in their pensionable pay of at least 10%, as a result of a change to their terms of employment.

The partial retirement policy aims to support members’ work-life balance later in their careers, and a gradual transition towards full retirement. We therefore expect members to reduce their pensionable working commitment in return for drawing down their pension while continuing to work.

Where members enter into a salary sacrifice arrangement, under the rules of the scheme their pensionable pay reduces. However, we do not believe that salary sacrifice is an appropriate way of accessing partial retirement, as it does not require any change to a member’s working commitment.

We therefore propose to clarify in the regulations that where a member enters into a salary sacrifice arrangement, this does not constitute an eligible change to their terms of employment for the purposes of taking partial retirement. We propose to make this change effective from 1 April 2024.

Question

Do you agree or disagree with the proposal to clarify the partial retirement regulations to expressly exclude access to this option via entering into a salary sacrifice arrangement?

• Agree
• Disagree
• Don’t know

If you disagree or don’t know, please explain your answer.

Public sector equality duty

The public sector equality duty is set out in section 149 of the Equality Act 2010 and requires public authorities, in the exercise of their functions, to have due regard to the need to:

• eliminate unlawful discrimination, harassment and victimisation and other conduct prohibited by the 2010 Act
• advance equality of opportunity between people who share a protected characteristic and those who do not
• foster good relations between people who share a protected characteristic and those who do not

This involves having due regard, in particular, to the need to:

• remove or minimise disadvantages suffered by people due to their protected characteristics
• take steps to meet the needs of people from protected groups where these are different from the needs of other people

The equality duty covers the 9 protected characteristics:

• age
• disability
• gender reassignment
• marriage and civil partnership
• pregnancy and maternity
• race
• religion or belief
• sex
• sexual orientation

DHSC has considered the impact of the proposed changes in the context of this duty below. DHSC invites respondents to help refine this initial analysis by contributing further perspectives or identifying where there might be other equality impacts to consider.

Member contributions phase 2

A full PSED analysis was carried out as part of the previous consultation which set out proposals for the delivery of the phase 1 and phase 2 member contribution structures. The previous analysis therefore remains consistent and relevant. The following sections set out an equality analysis for the changes to member contributions which were not included in the previous consultation.

Age

While the proposed changes will be applied to all members regardless of age, we have considered the potential impact on members in different age cohorts.

The table below shows the NHS Pension Scheme membership by AfC band and age, as of June 2023, using the ESR system. It is important to note that the ESR does not cover staff working in primary care or the independent sector, some of whom may be eligible to join the NHS Pension Scheme.

Table 4: pension membership by AfC band and age at June 2023 (Source: ESR)

	Under 25	25 to 29	30 to 34	35 to 39	40 to 44	45 to 49	50 to 54	55 to 59	Over 60	Total
Band 1	0	0	79%	80%	83%	83%	86%	88%	69%	78%
Band 2	93%	91%	91%	91%	92%	94%	94%	93%	78%	90%
Band 3	90%	89%	90%	91%	93%	95%	95%	94%	80%	91%
Band 4	89%	88%	88%	90%	93%	95%	95%	95%	80%	90%
Band 5	90%	81%	75%	81%	90%	94%	95%	93%	79%	85%
Band 6	90%	88%	86%	90%	93%	96%	96%	93%	80%	90%
Band 7	87%	89%	89%	92%	94%	96%	97%	93%	81%	92%
Band 8a	0	87%	89%	91%	94%	96%	97%	93%	82%	93%
Band 8b	0	90%	88%	91%	94%	96%	97%	94%	81%	93%
Band 8c	0	0	88%	90%	94%	96%	97%	94%	82%	93%
Band 8d	0	0	92%	93%	94%	96%	97%	93%	79%	93%
Band 9	0	0	0	92%	93%	94%	96%	91%	71%	91%
Medical	90%	88%	85%	86%	91%	95%	95%	89%	62%	87%
N/A	79%	81%	83%	85%	86%	89%	90%	84%	70%	83%
Total	90%	86%	85%	88%	92%	95%	96%	93%	78%	89%

Notes:

• 0 means those bands have no members in them for that age
• N/A means non-medical staff who are not shown to be on AfC terms

The table shows a general trend of increasing pension scheme membership from the 30 to 34 age group up to 50 to 54. Membership then reduces from age 55 to 59 and over 60, because these are the age groups at which pension benefits begin to be claimed.

The following table shows the distribution of members by age who work part time, as of June 2023, using the ESR system.

Table 5: NHS staff who work part time and full time by age

Age	Full time	Part time	All
Under 25	7%	2%	5%
25 to 29	15%	6%	12%
30 to 34	16%	12%	14%
35 to 39	13%	14%	13%
40 to 44	11%	13%	12%
45 to 49	11%	11%	11%
50 to 54	12%	12%	12%
55 to 59	10%	13%	11%
Over 60	6%	17%	10%

The above table shows that staff are more likely to work part time as they age. For example, under 25s make up 5% of the overall workforce, but 7% of the full-time workforce and only 2% of the part-time workforce. By contrast, over 60s make up 10% of the overall workforce, but account for only 6% of the full-time workforce and 17% of the part-time workforce.

It is therefore likely that a larger proportion of staff who make up the first tier of the contribution structure are older. The removal of this tier will be offset by the top-up payments made by HMRC. This will ensure no detrimental impact on members.

Sex

The Equality Act 2010 lists ‘sex’ as a protected characteristic. Data for the NHS Pension Scheme is also divided by sex. However, it is important to note that sex and gender are 2 different concepts. A person’s gender identity is not always the same as the sex assigned to them at birth, and some people may not identify as having a gender or as non-binary. Gender reassignment is also a protected characteristic under the Equality Act 2010.

The proposed changes will apply to all members regardless of sex and gender identity. We have considered the potential impact of the removal of the lowest contribution tier on members from this perspective, with a particular focus on work patterns.

Data from the ESR as of June 2023 shows that 76% of the NHS workforce are female. However, 90% of the part-time NHS workforce are female. Part time is defined as having a WTE of less than 1. Therefore, it is likely that women make up a greater proportion of the membership who currently occupy the lowest contribution tier. This tier will be removed in alignment with the introduction of tax relief top-up payments from HMRC, which will ensure there is no change to the take home pay position for impacted members.

Ethnicity

The proposed changes will apply to all members, regardless of their ethnicity. However, we have considered the potential impact on members from different ethnic backgrounds.

In line with other protected characteristics, we have assessed the proportion of staff who work part time by ethnicity. The following table uses data from the ESR at June 2023, and shows the proportion of the NHS workforce who work part time and full time by ethnicity.

Table 6: proportion of NHS staff who work full time and part time by ethnicity

Age	Full time	Part time	All
Any other ethnic group	4%	1%	3%
Asian or Asian British	16%	8%	13%
Black or black British	9%	5%	8%
Chinese	1%	0%	1%
Mixed	2%	2%	2%
White	63%	80%	69%
Preferred not to say	4%	3%	4%
No answer provided	1%	1%	1%

The above table shows that the largest differentials between full and part time working are found in the Asian or Asian British, black or black British, and white ethnicity groups. For example, Asian or Asian British staff make up 13% of the NHS workforce, and account for 16% of the full-time workforce and 8% of the part-time workforce, suggesting this ethnicity group are less likely to work part time. Black or black British staff make up 8% of the workforce, and account for 9% of the full-time workforce and 5% of the part-time workforce, suggesting this ethnicity group are less likely to work part time. White ethnicity staff make up 69% of the overall workforce, and account for 63% of the full-time workforce and 80% of the part-time workforce, suggesting that this ethnicity group are more likely to work part time.

It is likely that white ethnicity staff therefore make up a larger proportion of staff who work part time. This suggests that a larger proportion of the first contribution tier are white ethnicity staff. The removal of this tier will therefore impact on this group more than other ethnicities. The top-up payments provided by HMRC ensure members are not disadvantaged as a result of the changes.

Disability

The proposed changes will apply to all members regardless of disability. However, we have considered the potential impact on those with disabilities.

The NHS Workforce Disability Equality Standard 2022 sets out that 4.2% of the NHS workforce declared a disability through ESR in 2022, which is an increase of 0.5% since 2021. The number of people declaring a disability in the NHS Staff Survey has also increased from 20.1% in 2020 to 23.2% in 2021. These figures are significantly lower than the results of the Annual Population Survey. The latest results from 14 September 2023 show that there were 27,915,900 people in employment aged 16 to 64. Of these, 5,078,800 were either economically active (EA) core (including long-term disability which limits day to day activities) or work-limited disabled. This is an overall percentage of 22.44%.

There is some data to suggest that disabled people are more likely to work part time. Data from the Office for National Statistics (ONS) on disability and employment shows that working disabled people were more likely to work part time than non-disabled people, with 34.1% of disabled people working part time in comparison with 23.1% of non-disabled people. This data was included in the previous consultation document to deliver phase 1 of the member contribution changes but remains the most recently available data.

The removal of the bottom tier of the contribution structure, which will align with the introduction of top-up payments provided directly by HMRC, will only impact members who work part time in the NHS. This is because there are no bands of AfC which pay salaries low enough to fall into this tier on a full-time basis. The bottom tier is currently occupied by members with higher WTE salaries but who work part time. Based on the above figures, removing the bottom tier is likely to have a greater impact on people with disabilities as they are more likely to work part time. However, the top-up payments provided by HMRC will ensure there is no change to the take home pay position for impacted members.

Pregnancy and maternity

There is no available data on this group in relation to the NHS workforce or NHS Pension Scheme membership. However, we have considered the potential impact of the proposals on members who have this protected characteristic as part of our analysis on sex.

Religion or belief, sexual orientation, gender reassignment and marital or civil partnership status

Available data on people with these protected characteristics, both in the NHS Pension Scheme and the NHS workforce as a whole, is limited. However, we have considered the potential equality impacts of the proposed changes for members who share these protected characteristics and those who do not.

As contributions to the NHS Pension Scheme apply to all members equally and are based on pensionable pay, we do not consider that the proposals raise any specific issues for members in relation to their religion, sexual orientation, gender reassignment or marital or civil partnership status.

New employer contribution rate

The requirement to introduce a new employer contribution rate following the conclusion of the 2020 scheme valuation does not engage any protected characteristics.

Special class abatement

The proposed amendment to NHS Pension Scheme regulations to remove the mechanism of abatement for special class status members is a continuation of a provision initially provided by section 45 of the Coronavirus Act 2020. Therefore, DHSC’s equality analysis for the permanent removal of abatement remains consistent with the initial analysis performed at the introduction of the Coronavirus Act.

View the government’s equality analysis for the Coronavirus Act 2020

Miscellaneous amendments

Partial retirement: maximum service

We have considered the impact of the proposal to allow members who have previously breached the maximum service limits to access partial retirement on members with protected characteristics. This proposal will be available to all eligible members, regardless of any protected characteristics. We consider that the only characteristic that is relevant here is age.

Because members who have breached the maximum service limits in the 1995 Section are likely to be older than other members, by virtue of the fact that they have been in service for longer, the proposal to allow these members to access partial retirement is likely to have a positive impact on older members.

When partial retirement was first introduced, we considered that as it was likely to be in these members’ financial interests to take full rather than partial retirement and given that they can now retire and re-join the 2015 Scheme, it was unlikely that not allowing them to access partial retirement would lead to any potential impact occurring in practice. Our view is that this remains the case, however this proposal will offer them an additional option.

Partial retirement: salary sacrifice

A full equality analysis was undertaken to inform the partial retirement policy as implemented on 1 October 2023.

The department’s view is that in order for staff to partially retire, some reduction in pensionable workload is required to signal a step towards full retirement in future. We recognise that entering into a salary sacrifice arrangement presents a loophole that could undermine the policy intention.

On initial assessment, we are not aware of any potential impacts on members with protected characteristics that may result from not being able to use salary sacrifice to reduce their pensionable pay rather than by reducing pensionable workload as the policy intends.

Members, regardless of any protected characteristics, will remain able to enter into salary sacrifice arrangements if they wish.

Question

If you have any further considerations and evidence that you think the department should take into account when assessing any equality issues arising as a result of the proposed changes, please outline them.

How to respond

This consultation closes at 11.59pm on 7 January 2024, and you can respond via our online survey.

Comments on the proposals and draft regulations must be submitted online by the public survey. The survey also provides an opportunity to upload documents should you wish to submit additional comments.

If you have any queries on this consultation or require an alternative format, please email nhspsconsultations@dhsc.gov.uk. Do not send any personal information to this email address.

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