Home Menu Search

Pension fines

We have come across a few instances of “final pay controls” being applied. It is a complex area, however, the following bullet points will hopefully provide a useful summary of the key points:

  • Only applicable to members who have benefits in the 1995 section of the NHS Pension Scheme
  • Can be applied when a member receives, within 3 years of retirement, a pay increase which is more than CPI plus 4.5%
  • It is not a “fine” – for the employer, it is an additional funding charge and may lead to the employee suffering an excess annual allowance tax charge
  • From the employer’s perspective, the charge is designed to cover the higher than expected cost the NHS Pension Scheme will face in providing pension benefits to the member.
  • If the employer does not pay the charge promptly, interest and administration levies will start to be applied
  • Attached is a factsheet which provides an example showing how the charge is calculated
  • From the employee’s perspective, if, as a consequence of receiving high pay increases when close to retirement, they experience a sharp increase in the value of their pension benefits, they may be faced with an additional tax charge. Again, this can be a complex issue, however, as the member should be able to elect to have the tax charge paid by the scheme, resulting in a reduction in benefits, it is difficult to envisage any circumstances where the member will suffer any financial hardship. Indeed, net of tax charges, they are likely to be in a better position than they otherwise would have been had they received pay increases within the allowable amount.

 

Related information

DDLMC News Bulletin - 11.01.2019

Please pass this email onto your GPs and Practice Staff. To access some of the links included in this news bulletin...

DDLMC News Bulletin - 11.01.2019

Please pass this email onto your GPs and Practice Staff. To access some of the links included in this news bulletin...

DAILY COVID-19 BRIEFING DDLMC 01.04.2020

KEY MESSAGES FOR TODAY JOINT DDLMC/ GPA / GPTF / DCHS COVID RESPONSE TEAM The EOL guidance is being finalized and...

DDLMC News Bulletin - 07.12.2018

Please pass this email onto your GPs and Practice Staff. To access some of the links included in this news bulletin...

DDLMC News Bulletin - 08.03.2019

Please pass this email onto your GPs and Practice Staff. To access some of the links included in this news bulletin...

Funding

Funding We believe in the principle of voluntarism For 100 years Derby and Derbyshire Local Medical Committee...

DAILY COVID-19 BRIEFING DDLMC - 07.04.2020

NATIONAL UPDATES SOPs. NHSE have published an update to SOPs Version 2.1 with amendments highlighted in yellow....

Job Description/Person Spec Tools/Salary/Indemnity

The following pay structure is the one followed at the acute trust in Derbyshire and is the one promoted and...

Information for clinicians within primary care wishing to seek funding for advanced clinical practice MSc

Over the past 10-15 years the role of the advanced practitioner has evolved both within general practice, acute &...

11 April 2020 briefing - Shielded Patient Letters

I'm sorry we've had to resort to sending out a very short update today but we wanted to reassure you all about the...