Pensions’ contribution levels to change again
Yet another survey to consider the impact of increasing salary thresholds
By Edie Bourne
The salary doctors can earn in their NHS jobs before increasing pension contributions is likely to rise following yet another health service pension consultation.
The latest two-week consultation, which concluded on 17 May, considered raising each of the contribution tier boundaries by around 5%.
This proposal is to cut the chance of members paying larger contributions, simply by increasing pay bands due to statutory raises.
As an example, the top NHS pension contribution rate of 13.5% is now paid by those earning £72,031.
But should the measures in the consultation be taken forward, the new salary band would be £75,633 before that rate applies.
Patrick Convey, technical director with specialist financial planners Cavendish Medical, told Independent Practitioner Today: ‘New contribution percentages were only adopted last October, so if this proposal is approved, it will be yet another change for members to understand and plan around.
‘Following the earlier NHS consultation this year, which introduced substantial retirement flexibilities and the subsequent positive Budgetary changes, we may have hoped for a period of stability with regards to pensions.
‘However, it’s largely a positive move for those who may have been forced to increase pension contributions simply for receiving an inflationary pay rise.
‘And with defined-benefit schemes like the NHS, members are contracted into making contributions – they cannot simply choose to pay less into the scheme because of other financial commitments.’
Mr Convey, talking as consultants were also voting on industrial action because of the significant real-term pay cuts over the last decade, agreed it was ‘a challenging time’ for many.
He said even the good news of the pensions tax lifetime allowance being abolished might not be enough to stem the tide of senior doctors leaving the medical profession.