The Scottish Public Pensions Agency (SPPA), on behalf of Scottish Ministers, has opened a consultation on proposed changes to member contributions in the NHS Pension Scheme (Scotland), together with a draft amending instrument covering other scheme amendments. The consultation runs for twelve weeks, commencing on Tuesday 23 May and ending on Tuesday 15 August 20231.
The proposals set out a revised contribution structure for implementation from 1 October 2023, with the first phase introduced from October 2023 and the second phase from October 20241. The change would replace the existing contribution table with two new tables used to assess members' contribution rates from 1 October 20231. The consultation document states:
"This section sets out revised contribution structure proposals for implementation from 1 October 2023"
The proposed rates under the first table are set out by whole-time equivalent pay bands1:
| Whole-time equivalent pay | Proposed contribution rate |
|---|---|
| Up to £21,614 | 5.2% |
| £21,615 to £25,981 | 5.8% |
| £25,982 to £32,914 | 7.3% |
| £32,915 to £66,017 | 9.5% |
| £66,018 to £92,423 | 12.7% |
| £92,424 to £123,147 | 13.7% |
| £123,148 and above | 14.7% |
A second table begins at Tier 1, up to £13,330, at 5.8%1. The document does not set out the remaining tiers of that second table in the text available.
The consultation follows an initial consultation run by SPPA between 24 January 2022 and 27 February 2022 on reforming the member contribution structure. The document says that while some proposals were welcomed, the majority of respondents rejected proposals to flatten the tiered structure, and implementation of all proposals was postponed because of concerns about cost-of-living pressures on NHS staff1. The Scottish Government response confirmed the intention to proceed with using actual rates of pensionable pay to determine contribution rates and to increase contribution thresholds annually in line with a single annual pay award percentage, and committed to consult further on rebalancing the structure and on whether implementation should be phased1.
On scheme costs, the document says employers contribute 20.9% of each member's pensionable pay towards the cost of scheme benefits, and members are required collectively to contribute 9.8% across the whole scheme membership1. It says the yield rose from 6.6% to the present 9.8%, phased in over the three years from 2012/2013 to 2014/2015, and that over the last three years the contribution yield from the scheme has continued to drop from 9.6% to around 9.3%1. The employer contribution rate was set at 20.9% in the context of a lower expected employee contribution yield of 9.6% up to March 20231.
The draft amending instrument also covers other matters. It would allow members who take their benefits in the 1995 Section to return to work and build further pension in the 2015 Scheme, permanently remove the 16-hour rule, and make changes to scheme rules regarding inflation, as confirmed in a consultation response published on 28 March 20231. It would also retrospectively extend the suspension of retire and return restrictions, as set out in a consultation response published on 21 October 20221. The document says abatement for Special Class Status holders in the 1995 Section would remain suspended until 31 March 20251. Miscellaneous amendments include changes to the final pay control regulations in the 1995 Section, changes to opt out rules for Practitioner members, and small amendments to the definition of a Practitioner and rules around pensionable pay1. The document notes that the final pay control policy was introduced from 1 April 2014, that the NHS Pension Scheme in England and Wales confirmed changes to the final pay control rules from 1 July 2021, and that a change would be effective from 1 April 2023, giving effect to it retrospectively from that date1.
As part of the McCloud remedy, the final salary NHSPS(S) closed to further accrual from 1 April 2022 and all members moved into the 2015 CARE scheme for future service from that point1.
Why it matters for households
The proposals concern the percentage of pensionable pay that NHS Pension Scheme (Scotland) members pay into the scheme, and the pay bands those percentages apply to. If implemented as consulted on, the new tables would be used to assess members' contribution rates from 1 October 2023, with a second phase from October 20241. The rates a member pays depend on their whole-time equivalent pensionable pay band, so the effect differs by earnings level. The document records that the scheme's member contribution yield has fallen from 9.6% to around 9.3% over the last three years, against a collective requirement of 9.8%1. The other proposed amendments affect specific groups, including 1995 Section members who return to work, Practitioner members, and Special Class Status holders in the 1995 Section, for whom abatement would remain suspended until 31 March 20251. The consultation document does not state the effect of the proposals on individual members' take-home pay.
What happens next
The consultation closes at midnight on Tuesday 15 August 2023. Responses can be sent using the response form on the SPPA website to sppapolicy@gov.scot, or posted to NHSPS(S): Member Contributions Consultation (No. 2), SPPA, Tweedside Park, Tweedbank, Galashiels, TD1 3TE1. The document says SPPA intends to publish a summary of responses, and may publish responses in full1. The proposals are set out for implementation from 1 October 2023, with a second phase from October 20241.
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