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Update on NHS Pension Scheme employer contribution rates

The NHS Pension Scheme employer contribution rate increased on 1 April 2019 from 14.38% to 20.68%, this includes the 0.08% administration charge. The Department of Health and Social Care’s (DHSC) consultation response announcing the rise, published in March 2019, confirmed the available funding to meet the associated costs and that a transitional arrangement would operate in 2019/20 where employers in the Scheme would continue to pay 14.38%.

Although our initial expectation was that this transitional arrangement would only be in place for 2019/20, the approach continued in 2020/21 and we can now confirm that the transitional arrangement will continue again in 2021/22 in order to maximise stability for employers in the sector, particularly in light of coronavirus (COVID-19).

This means that for 2021/22, all employers should continue to pay 14.38% in employer contributions under their normal monthly payment process to the NHS Pension Scheme. NHS England and NHS Improvement will continue to make payments to the scheme for organisations covered by the commitment to the NHS.

As referenced in the consultation response, the 6.3% increase was split into two elements:

  • a 2.5% foreseen element, which was the increase expected at the time of Budget 2016
  • an unforeseen element accounting for the remaining 3.8%. Organisations outside the scope of the commitment to the NHS will receive funding for the unforeseen costs and will have to manage the impact of the foreseen element, in a continuation of the original 2019/20 arrangement.

For 2021/22, non-NHSE arm’s length bodies of DHSC, excluding NHS England, will continue to receive the same available funding support and the administrative arrangements will continue to be the same as 2020/21.