Pensions contribution rises 2012/13
The increase in contributions is phased in over three years from April 2012 with the first increase coming into effect on 1 April 2012. These rises were not negotiated with the trade unions as we saw no reason for rises of this level (3.2% over three years) since the NHS pension scheme is viable and sustainable.
However, the NHS trade unions did enter a ‘cost sharing agreement’ in 2008. That agreement meant that any future increases in costs would be picked by NHS employees either in increased contributions or in varying the benefit structure.
If this cost sharing agreement had been implemented fully, this would have meant an average increase in employee contributions in 2012/13 of around 1.5%. So while members of the pension scheme would have had to pay higher contributions in 2012/13 anyway, this rise is bigger.
The 3.2% increase is spread out over three years would mean average contribution increases of 1.2% in 2012/13; 1.2% in 2013/14; and 0.8% in 2014/15.
The increase in 2012/13
Those earning under £26,557 in pensionable pay do not see an increase in contributions in 2012/13.
| Full time equivalent pensionable pay (£) | Contribution rate (before tax relief) 2011/12 | 2012/13 contribution rate (before tax relief) | 2012/13 contribution rate increase (before tax relief) |
|---|---|---|---|
| Up to 15,000 | 5% | 5% | 0% |
| 15,001 – 21,175 | 5% | 5% | 0% |
| 21,176 – 26,557 | 6.5% | 6.5% | 0% |
| 26,558 – 48,982 | 6.5% | 8.0% | 1.5% |
| 48,983 – 69,931 | 6.5% | 8.9% | 2.4% |
| 69,932 – 110,273 | 8.5% | 9.9% | 2.4% |
| 110,273 and above | 8.5% | 10.9% | 2.4% |