Query about NHS superannuation contributions

rundmc-k

I recently noticed on my payslips that my superannuation contributions have dropped to 10.7% since April 2024, after sitting at 12.5% for the last few years, and I'm wondering why.

It's a little difficult to say exactly what my salary is (I'm an NHS self-employed associate dentist so my salary fluctuates month to month), due to the fact that what the Health Service deems to be my salary would not be what my take home salary is due to a separate contract with my Practice Principal where I receive a percentage of gross income with things like lab fees deducted etc (normal practice).

Suffice to say (I think) that my income has definitely not decreased this tax year, and, if the percentages are based on the previous full tax year, they wouldn't have decreased then either.

Would anyone know why this is? I'm presuming it would be better for me to still be contributing 12.5% as it would help my pension and be beneficial with tax as well, so I'm not sure why it has dropped?

Dazed_and_C0nfused

rundmc-k said:

I recently noticed on my payslips that my superannuation contributions have dropped to 10.7% since April 2024, after sitting at 12.5% for the last few years, and I'm wondering why.

It's a little difficult to say exactly what my salary is (I'm an NHS self-employed associate dentist so my salary fluctuates month to month), due to the fact that what the Health Service deems to be my salary would not be what my take home salary is due to a separate contract with my Practice Principal where I receive a percentage of gross income with things like lab fees deducted etc (normal practice).

Suffice to say (I think) that my income has definitely not decreased this tax year, and, if the percentages are based on the previous full tax year, they wouldn't have decreased then either.

Would anyone know why this is? I'm presuming it would be better for me to still be contributing 12.5% as it would help my pension and be beneficial with tax as well, so I'm not sure why it has dropped?

The NHS scheme operates the net pay method so yes, your pension contribution will mean your taxable pay is less than your salary.

But your contributions aren't used to build up a pension pot, you get a pension based on the scheme rules.  So if your pensionable earnings haven't changed then paying 10.7% is better.

toothdoctor

The NHS pension contribution rates/tiers changed for the 24/25 year. These new rates are on the NHS pension website and the contribution % you pay is dependant on your net pensionable earnings (npe)

rundmc-k

Dazed_and_C0nfused said:

rundmc-k said:

I recently noticed on my payslips that my superannuation contributions have dropped to 10.7% since April 2024, after sitting at 12.5% for the last few years, and I'm wondering why.

It's a little difficult to say exactly what my salary is (I'm an NHS self-employed associate dentist so my salary fluctuates month to month), due to the fact that what the Health Service deems to be my salary would not be what my take home salary is due to a separate contract with my Practice Principal where I receive a percentage of gross income with things like lab fees deducted etc (normal practice).

Suffice to say (I think) that my income has definitely not decreased this tax year, and, if the percentages are based on the previous full tax year, they wouldn't have decreased then either.

Would anyone know why this is? I'm presuming it would be better for me to still be contributing 12.5% as it would help my pension and be beneficial with tax as well, so I'm not sure why it has dropped?

The NHS scheme operates the net pay method so yes, your pension contribution will mean your taxable pay is less than your salary.

But your contributions aren't used to build up a pension pot, you get a pension based on the scheme rules.  So if your pensionable earnings haven't changed then paying 10.7% is better.

Yes of course, good point, the pension calculation is not based on contributions but rather net pay, so paying 10.7% is preferable indeed. Well, that's a little bonus I suppose

rundmc-k

toothdoctor said:

The NHS pension contribution rates/tiers changed for the 24/25 year. These new rates are on the NHS pension website and the contribution % you pay is dependant on your net pensionable earnings (npe)

Yes indeed, I'd had a wee look at the comparative tiers for 23/24 and 24/25 earlier and although there is technically a small slot in which one could fall to go from 12.5% down to 10.7% in the respective year, I was fairly sure I didn't fall in that slot. However I must admit I haven't the documentation in front of me to work out exactly what my npe would be so I guess it could be right.

jeelz

Could it be that your private earnings have risen whilst your NHS earnings have dropped a little? This could result in your NPE dropping you into a lower contributory bracket without you seeing any drop in your monthly income.

Purplelady65

A recent change introduced is that your pension contribution % is based on your earnings and not on your pay band which it was previously. Could that have impacted on you? It was because part-time workers on a higher pay band were paying more in pension contributions than someone working full-time on a lower pay band due to the % contribution cut off points. This recent change should make it fairer for all. 

Flugelhorn

Purplelady65 said:

A recent change introduced is that your pension contribution % is based on your earnings and not on your pay band which it was previously. Could that have impacted on you? It was because part-time workers on a higher pay band were paying more in pension contributions than someone working full-time on a lower pay band due to the % contribution cut off points. This recent change should make it fairer for all. 

I am not sure that this is the case here as the OP would probably have been classed as a practitioner all along and the contribution was  always  based on earnings not salary 

rundmc-k

jeelz said:

Could it be that your private earnings have risen whilst your NHS earnings have dropped a little? This could result in your NPE dropping you into a lower contributory bracket without you seeing any drop in your monthly income.

This is a fair point but I've been keeping an eye on NHS earnings and I didn't think they'd dropped, but I think they must've stayed about the same and that has meant they've fallen into the very small window that has allowed me to drop from the 12.5 to 10.7 range. I'll have to go and try and work out my NPE to be sure

rundmc-k

Flugelhorn said:

Purplelady65 said:

A recent change introduced is that your pension contribution % is based on your earnings and not on your pay band which it was previously. Could that have impacted on you? It was because part-time workers on a higher pay band were paying more in pension contributions than someone working full-time on a lower pay band due to the % contribution cut off points. This recent change should make it fairer for all. 

I am not sure that this is the case here as the OP would probably have been classed as a practitioner all along and the contribution was  always  based on earnings not salary 

Yes that would be true in my case

Moonwolf

For the record, these are the current contribution rates.  Last year you had to be earning £58,973 to trigger 12.5%.  Supposedly, in future, these bands will go up in line with Agenda for Change payrises.  

Pensionable pay range from 1 April 2024	Contribution rates from 1 April 2024, based on actual annual pensionable pay
Up to £13,259	5.2%
£13,260 to £26,831	6.5%
£26,832 to £32,691	8.3%
£32,692 to £49,078	9.8%
£49,079 to £62,924	10.7%
£62,925 and above	12.5%