The final pay control regulations were introduced from 1 April 2014 to protect the pension scheme from the costs that arise where an employer awards an exceptionally high pay rise to a member of the 1995 section of the NHS Pension Scheme, to achieve an inflated pension benefit. Under the 1995 Section of the NHS Pension Scheme, a scheme member’s pension is calculated using their highest salary in their final three years of pensionable service. As a consequence, a member who has a significant pay increase in their final three years will receive a substantially larger pension than they would have received without the pay increase. Practice partnerships, as employers, can receive final pay control charges if they award a pay increase that exceeds the allowable amount.
Since the introduction of the regulations, a number of exemptions have been introduced to stop employers receiving a final pay control charge for awarding significant pay increases for genuine reasons. These recent exemptions include:
- pay increases that are necessary to comply with the national minimum wage and living wage
- nationally agreed annual pay awards for Agenda for Change employees
The BMA has been working with other trade unions, NHS Employers and Department of Health and Social Care to ease these regulations and allow for a far less strict interpretation of the regulations. As a result we hope to see developments in the near future that will increase the allowable amount, add further exemptions to the final pay control regulations, allow more discretion in the regulations and restricting the payment of charges to being pursued above a certain minimum level. Practices must discuss those issue with their accountants. Please note that this does not relate to GP partners but to final salary scheme doctors and other employed practice staff.