An email went out to all employers on 5 March 2019 highlighting the proposed changes which were outlined in a consultation document released by the Department of Health and Social Care (DHSC).
We have highlighted below the main changes that will be implemented as a result of this consultation and what it means for you.
Employer Contribution Rate
The new employer contribution rate of 20.6% (not including the 0.08% admin levy) is a 6.3% increase from 14.3%.
The increase of 6.3% has been split into two types of payments in the consultation response:
- 3.8% as unforeseen costs
- 2.5% as foreseen costs, initially referenced in Budget 2016
The consultation response confirms that these changes will be transitional and current funding is available to support employers with either the full amount or only the unforeseen costs being funded, depending on employer type.
The Consultation response outlines which organisations will receive funding for the full 6.3%, these are:
- Trusts
- CCG’s
- CSU’s
- GP Practices
- Dentists
- Independent Providers
- Social Enterprises
- New Fair Deal
- Charities and Hospices
The organisations referenced in the response as only eligible for 3.8% are:
- Non–NHS England Arm’s Length Bodies of the Department
- Local Authorities
All Employers, including those outside the full funding scope, will continue to only send 14.38% employer contributions over 2019/2020.
Those eligible to pay the 2.5% foreseen cost will have this recouped by a corresponding reduction to the funding such organisations receive from the Department. The Department is currently considering the optimum way of recouping the costs for those organisations which do not directly receive funding from DHSC. It is important from a scheme administration perspective that all employers pay the same percentage rate.
Welsh Government is currently working through the funding and payment options for the increased employer contribution costs in 2019/20. As part of this they have been in discussions with HM Treasury, DHSC and NHS Pensions.
Arrangements for 2020/21 will be confirmed in due course, with the expectation that the Scheme will return to ‘business as usual’ arrangements in 2020/21 both in terms of contribution collections and funding flows.
Employee Contribution Rate
The current employee tiered contribution rates will not change until 1 April 2021 at the earliest.
Entitlement of 1995 Section survivors of same sex civil partners and marriages'
Following the Walker v Innospec case, regulatory changes will be introduced to provide that survivors of same sex marriages and same sex civil partners are treated in the same way as widows of opposite sex marriages (survivor benefits on all the member's service where the marriage or civil partnership was before the member's last day of service or 6 April 1978 if the marriage or civil partnership was after the last day of service); and the change applies from the date civil partnerships and same-sex marriages where implemented.
This change does not apply to widowers (male survivors) of opposite sex marriages or Scheme partners (previously nominated partners).
Exempting Agenda for Change pay increases from Final Pay Control charges
There is an exemption of Agenda for Change pay increases from final pay control charges for the Framework agreement on the reform of Agenda for Change adopted on 27 June 2018. This means that employers will not be liable for a final pay control charge where members receive a pay increase further to the nationally agreed Agenda for Change pay award.
DHSC received some comments on final pay controls that were outside the scope of the proposals presented in this consultation. The final pay control mechanism came into force on 1 April 2014 and therefore the Department proposes to undertake a review of the policy in conjunction with the Scheme Advisory Board. The observations and comments received through this consultation will be considered within this review.
Removal of the requirement to nominate unmarried co-habiting partners for survivor benefits
There is no requirement for members to nominate an unmarried co-habiting partner to receive survivor pension benefits upon death of the member. Although it is now no longer mandatory, it is still recommended that members complete nomination forms available on the website.
https://www.nhsbsa.nhs.uk/member-hub/nominations
The remaining qualifying criteria remains, namely that for a continuous period of at least two years ending with the member’s death, the member and the partner were:
- Living together as if they were married or civil partners;
- Not prevented from marrying or entering into a civil partnership;
- Financially interdependent or the partner was financially dependent on the member, and;
- Neither were living with a third person as if they were married or civil partners.
Nominated partners' will now be referred to as 'Scheme partners' by NHS Pensions
Statements of estimated contributions of pensionable income
The consultation outlines the changes regarding the ‘Estimate of Pensionable Earnings’ that must be submitted to PCSE or Local Health Board each year. The consultation confirms that where a GP Practice/APMS contractor fails to provide a statement of estimated pensionable pay for all GP’s and Non-GP Partners to the ‘host board’ (PCSE or LHB), then the member GP/Non GP Partner will automatically be set at the maximum employee contribution rate (currently) 14.5% with effect from 1 April 2019.
Recovery of arrears of scheme contributions from benefits
Where a GP/Non GP Partner has failed to pay over their NHS Pension Scheme contributions, we are able to recover these arrears from their NHS Pension benefit at retirement.