The Department for Health and Social Care (DHSC) has launched a consultation that proposes permanently removing abatement from NHS Pension Scheme rules, and changes to contribution structures and rates.

Abatement is currently suspended until 31 March 2025 after the Covid-19 pandemic placed pressure on the NHS workforce and the government wanted to encourage retired and partially retired staff to return to work or increase their work hours.

Historically, special class status (SCS) members who returned to work between the ages of 55 and 60 were subject to abatement, which meant their pension plus salary could not exceed their pre-retirement income, and their pension was reduced if it did.

“Subject to parliamentary approval, the department intends to amend the 1995 NHS Pension Scheme regulations to permanently remove the SCS abatement mechanism,” the consultation stated.

Commenting on the proposal, Quilter NHS pensions expert, Graham Crossley, said: “The permanent end to abatement is something that pretty much everyone has wanted to get rid of to aid retention of staff.

“So, it is great that the DHSC has seen sense and opted to permanently get rid of abatement.”

However, Crossley expressed concerns about the proposal to clarify regulations that where a member enters into a salary sacrifice agreement, this does not contribute an eligible change to their terms of employment for the purposes of taking partial retirement.

“It's unfortunate that the same common sense has not been applied to the new partial retirement rules,” he said.

“The 10 per cent reduction on pay to facilitate partial retirement is causing issues up and down the country, and the proposed changes to remove salary sacrifice from the 10 per cent pay reduction requirement is a step in the opposite direction.”

The government has also proposed changes to member contribution structures and rates, with the 11 earnings tiers being reduced to six: Up to £13,246; £13,247 to £25,146; £25,147 to £30,638; £30,639 to £45,996; £45,997 to £58,972; and £58,973 and above.

The proposed contribution rates from 1 April 2024 were 5.2 per cent; 6.5 per cent; 8.3 per cent; 9.8 per cent; 10.7 per cent; and 12.5 per cent, respectively.

This will result in some members’ contribution rates changing, depending on which tier they have moved to, while some members' rates will remain the same.

For employers, the DHSC has proposed increasing the contribution rate by 3.1 percentage points to 23.7 per cent.

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