latest health care news

27.03.17

Levy confirmed on employers to foot NHS pension scheme bill

A levy to cover the cost of administering the NHS pension scheme will be introduced on employers, commencing from 1 April, the government has confirmed.

The news comes following a consultation that has been open since November. At present, the Department of Health (DH) fund the cost of the Business Services Authority NHS Pension Scheme that around 1.5 million people actively benefit from.

But DH has argued that because administration of the scheme is a frontline operational activity for the benefit of NHS employers and staff, the cost of the scheme should also be left to the NHS.

The levy will be a flat rate of 0.08% of pensionable pay for all employers and will be collected to the standard employee contribution rate of 14.3%.

The change will mean that employers will now pay 14.38% of pensionable pay in total, and will have to change their arrangements to meet the new system by the start of next month when the levy comes into effect.

The most recent development also follows another consultation into multi-specialty community provider (MCP) pension schemes, saying that new MCPs holding an MCP contract will be able to become an NHS pension scheme independent provider.

When the consultation opened, NHE reported that the new levy was likely to cost NHS organisations £35m at a time when trusts across the country were already struggling to work on stretched budgets with an increasingly large workload.

The government’s consultation read: “A levy was proposed as a method for recouping pension scheme administration costs from participating employers.

“In doing so, it is anticipated that the relationship between employers and the scheme should become more client focussed, leading to an administration service that is more responsive to employer needs.”

NHS Employers CEO Danny Mortimer said: “Employers are concerned and disappointed about the introduction of the scheme administration levy at a time of extraordinary financial pressure on the health service.

“In addition to this levy, they have to address the apprenticeship levy, the immigration skills charge, and the removal of tax and national insurance advantages for certain benefits through salary sacrifice.”

After the government opened its consultation, an NHS confederation spokesperson said: “The approach adopted effectively shunts the costs of the new pension levy to employers already struggling to balance the books.

“Once again, as with increases to CQC fees, providers of direct patient care will carry most of the financial burden at a time when we need to be maximising investment in frontline care.”

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