The percentage of your pensionable income that you contribute to your NHS Pension is known as the tier rate. Your tier rate is determined by the value of your pensionable pay. The tier bandings are set to change in a two phase process with Phase 1 coming into effect from 1st October 2022.
The new tier rates for each phase are shown in the table below.
Alongside the new tier rates, there is a further key pension change which will be hugely beneficial to part-time hospital doctors and Portfolio GPs with an Officer post:
- Pension tiers on officer roles will now be based on actual pay rather than whole-time equivalent pay.
- This will dramatically lower the tier rate suffered by those with part-time officer roles.
- Pension tiers for officer posts remain to be set independently of all other officer or practitioner roles (but it has been suggested that this may change in the future).
GP Locums, however, 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 SOLO post alongside this. The highest tier rate is now 13.5%, reducing to 12.5% in Phase 2.
The winners here are those with pensionable pay in excess of £47,846, part-time hospital doctors and Portfolio GPs with an officer post.
Additional Notes and Tax Planning
- The value of your pension is calculated by way of your pensionably pay, NOT the amount of contributions you have paid.
- The method for completing the September Locum B form (applicable to GP Locums) will be slightly different. I have written a separate blog post on this with further guidance.
- The date for Phase 2 has not yet been announced but it is expected to be in 2023.
- Tier rates will now be linked to Agenda for Change pay awards so that incremental increases shouldn’t tip you into a higher tier rate.
- The highest tier rate is now 13.5%, reducing to 12.5% in Phase 2.
- 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 furthertapered by the additional taxable pay.
- Those hovering close to or above taxable pay of £200k could see an impact on theirannual 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.