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Members where NHS pay increase results in reduced take-home pay

The PDA are highlighting that some members employed by the NHS face a situation where the pay increase will result in them receiving less take home pay each month, and due to the increase being backdated they now need to repay money to their employer.

Wed 14th September 2022 The PDA



The PDA are happy to assist members who would like to discuss employment and professional issues but emphasises that the PDA team are not tax lawyers or pension advisors and cannot give regulated tax/pensions advice. 

Some PDA members may have portfolio careers and for example may be both employed and undertake locum work on a self-employed basis.  They may have their own accountant who may be able to provide regulated advice regarding pensions or taxation.

PDA membership also includes access to a free 24-hour tax advice helpline which provides over-the-phone advice about the law in England and Wales and is available 24 hours a day, seven days a week.

The following article provides information to assist members but should not be relied upon as any form of pension or tax advice.

The PDA sought members views and submitted a consultation response regarding NHS pensions in October 2021. The government’s response to that consultation was published in February 2022 and the PDA updated members again at that time.  Members employed by the NHS are encouraged to re-read these articles and the link to the outcome of the government’s consultation. 

One issue which the above links demonstrate the government have committed to resolving, can currently still occur, and some members have experienced this already, whereby the latest NHS pay increase can result in them receiving less take home pay.

With income tax, the higher rate of deductions apply only to the part of someone’s income which is above the higher rate tax threshold. However, for NHS pensions if someone’s salary goes above a higher pension contribution rate threshold, the higher pension contribution rate applies to their entire salary.

The banding for pension contribution rates are based on salary, not grade and they have not increased in line with pay increases since 2015 meaning more people have had their pay move into a higher pension contribution rate due to pay increases.  To date, part-time employees have also been placed in the band appropriate for their Whole Time Equivalent (WTE) salary.

For some employees the higher pension contribution rate once applied to their entire salary can mean the increase to the amount of salary deducted for pension is greater than the additional pay they receive from a pay increase, meaning that although their gross pay increases, their net pay (the amount they take-home after deductions) decreases.  Hence, they may receive a reduction in take home pay compared to before the increase was applied.

Backdating the increase to April means those employees have already received more take home pay each month than if the increase had been applied at its effective date. They are therefore asked by their employers to repay the difference. The PDA is aware that some NHS Trusts have already offered individuals in this situation the option to repay any such amount in instalments.

Act now

In future, the changes detailed in the links above should ensure that the thresholds for higher contribution rates increase in line with pay increases, hence this particular problem should not happen again.  However, those currently impacted may need support now.

As every individual’s circumstances may differ, the PDA encourage members who are faced with a request to repay any amount to their employer, to first contact their employers’ HR department to obtain in writing confirmation of  how and why their pay has been impacted, as it should not be assumed the above is the reason for unexpected changes to take home pay.

The PDA call on government to urgently examine the impact on NHS employees who are facing reductions of take home pay now due to the current pay increase and take action to prevent this happening to those impacted at this time.

In the meantime, the PDA:

  • reiterate that members may want to seek appropriate regulated tax and/or pension advice for their individual situation.
  • call on NHS Trusts to make tax and pension advice readily available to their employees
  • call on NHS employers to clearly communicate the consequences of pay increases and the NHS pension rules to their workforce
  • call on all NHS employers to offer the facility for individuals to repay any salary overpayment in instalments if required

Members employed by the NHS should also be aware that, as explained in the links above, new contribution rates and rules will take effect on 1 October this year and again in April 2023, further changing pension contribution rates for some members. Read that information again here. 



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The Pharmacists' Defence Association is a company limited by guarantee. Registered in England; Company No 4746656.

The Pharmacists' Defence Association is an appointed representative in respect of insurance mediation activities only of
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and is authorised and regulated by the Financial Conduct Authority (Register No 307063)

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