NHS Pension Scheme and Payroll
Processing a payroll for a specialist sector as Healthcare comes with certain rules, legislation and particular processes to follow. An area that needs particular specialist care is the NHS Pension Scheme and how it is applied to the payroll.
When applying the NHS Pension to an employees’ record, in order to deduct the appropriate pension amounts, it is necessary to take into account a few considerations:
Establish the ‘whole time’ annual figure for the member of staff for their particular role
This is quite likely to vary from one Practice to another with no standard contract set in stone, it could range from 35,37,37.5,40 to name some common ones. Then for each member of staff the annual figure is achieved by taking their ‘whole time’ hours for the role and multiplying this by the hourly rate particular to that role. The ‘whole time/full time’ hours for the Practice are used to establish the tier even if the member of staff works part time. Below are 2 worked examples explaining this further:
Example 1 : Full Time Employee working 37 hours per week
Practice ‘whole time’ hours are 37 x 52 (or 52.143 should the Practice use this ruling) = 1924 hrs x hourly rate of £9.00 = £17316 total annual pensionable pay (see table below) this would fall into 5.6% tier.
Example 2 : Part Time Employee working 20 hours per week
You would still take the ‘whole time’ hours for the Practice which in this case is 37 and follow the same calculation as above, the same 5.6% tier would be applied.
In relation to the NHS Pension Scheme, the correct percentage is applied to the employees’ pensionable pay up to and including the ‘whole time/full time’ hours worked. The maximum number of hours that can be pensionable are the normal (standard) whole time hours for their particular role. For example, if the standard working week is 37 hours, a part timer normally working 20 hours a week may pay pension contributions on up to an additional 17 hours per week (up to whole/full time), any additional hours over and above the ‘whole/full’ time hours would be non-pensionable.
Contribution rates before tax relief (gross)
|Tier||Full-time pensionable pay used to |
determine contribution rate
|Contribution rate |
(before tax relief) (gross)
|1||Up to £15,431.99||5%|
|2||£15432.00 to £21477.99||5.6%|
|3||£21478.00 to £26823.99||7.1%|
|4||£26824.00 to £47845.99||9.3%|
|5||£47846.00 to £70630.99||12.5%|
|6||£70631.00 to £111376.99||13.5%|
|7||£111377.00 and over||14.5%|
The employer pension contribution for this current tax year 2017/18 would be 14.38% on pensionable pay.
If you would like to discuss the NHS pension scheme and payroll in more detail, or you would like to speak with a member of our team, please contact Jane Irving or call 01524 388719 to be put in contact with a member of our Payroll team.