The percentage of your pensionable income that you contribute to your NHS Pension is known as the tier rate and is based on the value of your pensionable pay. The tier bandings and rates are changing from 1st April 2024 with the aim of reducing the gap between the different tiers of contribution rates.
The provisional* new values are as shown in the table below.
* These salary ranges will be automatically reviewed in line with the percentage increase in the Consumer Price Index (CPI) on 1 April every year, with the exception of the lowest tier. If the Agenda for Change pay award for England that is announced later in the year is higher than the increase in CPI, contribution tiers will be updated to reflect the higher pay award. This means that incremental increases shouldn’t tip you into a higher tier rate.
GP Locums will remain subject to annualisation which means that they will still suffer the highest tier rate on Locum work unless they have a salaried practitioner or ongoing, continuous SOLO post alongside this. The highest tier rate is now 12.5%, reducing from 13.5% in the last 18 months.
Additional notes and tax planning
Where pension contributions decrease, taxable pay will increase. This may have tax implications as follows:
- If you were previously hovering close to the £100k threshold you may now exceed it, potentially changing your tax return obligations, entitlement to the tax-free childcare scheme and causing you to start to lose some of your personal tax-free allowance.
- If you were previously over £100k, your personal allowance could become further tapered by the additional taxable pay.
- Those hovering close to or above taxable pay of £200k could see an impact on their annual allowance tax charges with their pension savings annual allowance becoming subject to tapering.
If you are concerned about how any of the above could impact you, please get in touch.