In January 2021 a consultation was launched to cover proposed changes to the NHS Pension Scheme Regulations which included proposals to reform Final Pay Controls and will significantly reduce the scope of charges. The proposed changes are;
- To increase the allowable growth from CPI 4.5% to CPI +7.0%
- To exempt pay increases that are in line with changes in NHS terms and conditions formally approved by the Secretary of State e.g. pay rises under national agreed contracts
- To exempt pay rises that result from National Clinical Excellence Awards
- To exclude pay rises from promotions where these are on the basis of fair and open competition
- To reform rules for non-GP partners to remove profits increases where profit sharing percentages have not changed or where they have only changed due to changes in the partnership composition.
In addition, charges notified after 1 April 2018 can be redetermined to take account of the new proposals. Changes to pay or profits outside of these exemptions will still be liable to Final Pay Controls so practices still need to be careful.
This is a very positive proposal and should remove legitimate pay increases from being subject to a charge although still providing the Pension Scheme with some protection from artificial pay rises designed to maximise pension benefits on retirement.
Practices impacted will also be able to review charges retrospectively.
The consultation ends on 9 April 2021 and details can be found here.
Written by Elaine Mitchell, Healthcare Client Director
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