NHS payrise and pension

[PolarTundra]

Hi there, first payday today since the NHS 'payrise' which has been backdated to April, very happy to have a few hundred extra in my pay this month.
However - my pension contributions have gone up over 3% this month bumping from 9.3 to 12.5%.
I've just put my new pay into a salary calculator (I'm top of band 8a) and next month I will be taking home over £100 less than before the payrise kicked in, because it will be swallowed up by pension. This is before the NI rise kicks in!
Is this right? Does anyone know if the pension bands will increase at any time now that pay has gone up?
I know I'm lucky to be earning a good salary and I'm sure I'll be happy with my pension when I'm 80 but right now, with mammoth childcare fees and cost of living going up this is really going to be a squeeze 😔

Yes just checked and my pension went up a few years ago after my job evaluation meant that I moved from a 7 to a 8a.

@UnfinishedBunting

Can someone explain the part time pension thing please? Is it that someone part time actually pays a full time contribution, and will receive a full time pension? Or is it something else? Thanks!

Let’s use some numbers here.

Let’s say a salary of £36k has a 9.3% contribution rate.

So someone earning full time £36k pays £3348 per year.

Someone working half time earns £19k (half) and pays £1674 (half the full time rate).

They both get 1/60th (?) of the pensionable salary for that year on retirement, which will be half the full time rate for the half timer, having paid half the amount of contribution in £s but the same percentage.

Thanks @NavigatingAdolescence, I'm so tired, I'll come back to this when I'm more awake.

@NavigatingAdolescence I thought the pension contributions were as if you earn the full time salary though? And that's what is changing? So the £19k 0.5wte person still pays as if they earn £38k?

The % bandings are based on full time salary.

So (illustrative only)

Up to £25k (full time equivalent) 5%
£25,001 to £35k (FTE) 6.5%
£35,000 to £45k (FTE) 9.3%
£45,001 to £60k (FTE) 12.3%

Percentage has to stay the same for part time staff to be correctly proportional for pension value.

So then if someone earns £12.5k for half hours then they should be paying 5% for it all to work. Not 2.5%.

[quote Misty9]@NavigatingAdolescence I thought the pension contributions were as if you earn the full time salary though? And that's what is changing? So the £19k 0.5wte person still pays as if they earn £38k?[/quote]
Same percentage.

I’ve demonstrated that the half time person pays the same % which equals half the £ of the full time person above.

@Misty9

Yes they do but the same % so a lower total.

It's easier if you do it with made up figures.

Person A works full time on imaginary band P - they get paid £40k per year. 10% pension contribution, so they pay £4,000.

This accrues them 1/50th (imaginary) of their salary in pension: so £800 per year.

Person B works 2.5 days per week on Band P - £40k per year, but pro rated to £20k. So they pay the same 10% but this costs them £2k. Their 1/50th would be £400.

Person C works full time but as a Band L: they earn £20k per year full time. They only pay 5% towards their pension. So it costs them £1k. They still get 1/50th of their salary, so accrue £400 per year.

So persons B and C earn the same gross amount but C pays less total contributions as their FTE salary is lower. A and B pay the same proportion, but B pays less than A because they earn less.

I have to do everything with easy numbers first and then translate it into real numbers!

[quote Gladioli23]@Misty9

Yes they do but the same % so a lower total.

It's easier if you do it with made up figures.

Person A works full time on imaginary band P - they get paid £40k per year. 10% pension contribution, so they pay £4,000.

This accrues them 1/50th (imaginary) of their salary in pension: so £800 per year.

Person B works 2.5 days per week on Band P - £40k per year, but pro rated to £20k. So they pay the same 10% but this costs them £2k. Their 1/50th would be £400.

Person C works full time but as a Band L: they earn £20k per year full time. They only pay 5% towards their pension. So it costs them £1k. They still get 1/50th of their salary, so accrue £400 per year.

So persons B and C earn the same gross amount but C pays less total contributions as their FTE salary is lower. A and B pay the same proportion, but B pays less than A because they earn less.

I have to do everything with easy numbers first and then translate it into real numbers![/quote]
Thank you, that's very clear :)
So what is the change being proposed?

Yeah its crap. It's an incentive not to work more.
I breached it a few years ago. And it really wasnt worth it.

So I think the changes are basically to:

1. Change the tiers so that the highest tiers no longer exist but if you work part time you'll go into a lower tier, and if you earn less than £13 k gross you'll get a special discounted tier. See first photo.

1. Alter the rates so they align with the AfC bands so stuff like this pay rise won't give the accidental net reduction in take home it has created here.

But it will result in an increase in an increase for some people in very particular pay bandings. E.g see second photo.

The reason this will happen is at the moment higher earners subsidise the pension costs of lower earners. But will be difficult for those it affects.

@Gladioli23

So I think the changes are basically to:

1. Change the tiers so that the highest tiers no longer exist but if you work part time you'll go into a lower tier, and if you earn less than £13 k gross you'll get a special discounted tier. See first photo.

1. Alter the rates so they align with the AfC bands so stuff like this pay rise won't give the accidental net reduction in take home it has created here.

But it will result in an increase in an increase for some people in very particular pay bandings. E.g see second photo.

The reason this will happen is at the moment higher earners subsidise the pension costs of lower earners. But will be difficult for those it affects.

Thank you, I have been silently tearing my hair out at the fundamental lack of understanding by some here x

I welcome the change. I earn 35500 a year and pay the same pension as somebody earning over (just shy of) 48k. This will be unmanageable with NI rise too.

@TangoWhiskyAlphaTango I’m a top band 4 just under £25k and I’m paying the same percentage as you and the 47K. It’s a massive band.

@NavigatingAdolescence but the important point you missed out in your otherwise good explanation of the bands (which @Gladioli23 did include) is that if there's a 3rd person who works full time and earns £19k then they only pay 5%. So they accrue the same pension as the part time person earning the same salary, but it costs them less. Given the whole point of the tiered system was that it was supposed to make things more affordable for lower earners, it makes no sense that people are classified differently if they have a lower income due to their band or how many hours they work.

I assume it was previously this way because it was assumed that many part time workers are only part time for part of their career and their final salary pension would be based on a full time salary. Really should have been changed when the pension scheme was changed.

Ah. I’m with you now. 👍

[quote Sprostongreen21]@TangoWhiskyAlphaTango I’m a top band 4 just under £25k and I’m paying the same percentage as you and the 47K. It’s a massive band.[/quote]

😱😱😱

How come? Mine is because weekend enhancement pushes me from 45k to 48k WTE.

[quote SpamIAm]**@NavigatingAdolescence* but the important point you missed out in your otherwise good explanation of the bands (which @Gladioli23* did include) is that if there's a 3rd person who works full time and earns £19k then they only pay 5%. So they accrue the same pension as the part time person earning the same salary, but it costs them less. Given the whole point of the tiered system was that it was supposed to make things more affordable for lower earners, it makes no sense that people are classified differently if they have a lower income due to their band or how many hours they work.

I assume it was previously this way because it was assumed that many part time workers are only part time for part of their career and their final salary pension would be based on a full time salary. Really should have been changed when the pension scheme was changed. [/quote]
Yes, this was what I meant to say - that I pay the same percentage as someone earning much more than me, because I'm part time. So the new tiers are take home salary rather than wte then?

I’ve got no idea….. the 9.3 % pension band starts at 26.8k I think. So at top band 4 ( not London) my full time wage is two thousand under. I do get enhancements but not that much a year ( no nights) maybe 2 weekend days a month.

I’ve no idea how I’m now tipped into the next pension bracket. But I’m not the only one.
I’ve no objection into paying for my pension but it still seems high percentage when on a lower band, when others are earning £20K more are in the same bracket and was a shock as I thought I was under that band.

@Sprostongreen21

I’ve got no idea….. the 9.3 % pension band starts at 26.8k I think. So at top band 4 ( not London) my full time wage is two thousand under. I do get enhancements but not that much a year ( no nights) maybe 2 weekend days a month.

I’ve no idea how I’m now tipped into the next pension bracket. But I’m not the only one.
I’ve no objection into paying for my pension but it still seems high percentage when on a lower band, when others are earning £20K more are in the same bracket and was a shock as I thought I was under that band.

So you're paying 12.5% too as a band 4? Gosh that doesn't seem right at all. You have my sympathy it's a horrible situation to see your pay minus hundreds of pounds you weren't expecting, especially on top of Xmas. I bet pay role had many upset staff members calling them yesterday 😞

@UnfinishedBunting

Can someone explain the part time pension thing please? Is it that someone part time actually pays a full time contribution, and will receive a full time pension? Or is it something else? Thanks!

I assume it means, You just pay the same % as a full time person but pay less as that % is based on part time pay not full.

When you get your pension it’s adjusted down for the period you put less in.

So if you’re full time on £500 a month and pay 10% you would pay £50
If you’re part time on £250 a month you would still pay 10% but £25

You reap at retirement what you sow in work.