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Private providers to gain access to NHS Pension Scheme from April 2014

Private providers will gain access to the NHS Pension Scheme from next year under Government proposals to ensure a ‘truly plural NHS market’ published today.

The proposals would ramp up competition for NHS providers, as any company with an NHS standard or APMS contract would be able to opt any employees working for the NHS for more than 50% of their time into the scheme.

The Government says its proposals – contained in a consultation document published today – will ensure greater staff mobility and remove the tilt in the ‘pensions playing field’ towards the NHS.

It said that it was accepting the recommendations from the ‘Staff Passport Group’ – which includes the Treasury, the Department of Health, the NHS and private companies – that the NHS Pensions Scheme should be extended to independent providers.

It said: ‘The “pensions playing field” has until now been tilted away from the new independent providers and towards the NHS, with the latter able to join staff in the defined benefit NHS Pension Scheme (NHSPS) at relatively low employer cost, and independent  providers unable to join NHSPS and facing up to double the cost to provide “broadly comparable” pensions.’

It said that access to the NHS Pensions Scheme will cost private providers the same as it does for all NHS providers, with employer contributions of 14%.

The document said: ‘Subject to suitable controls and a careful post-implementation review of the new access arrangements, Ministers have approved the Staff Passport Group’s recommendation that NHSPS should be extended to new independent providers. Comments are invited on the attached draft NHSPS Amendment Regulations, effective from 1 April 2014, subject to parliamentary process.’

It also introduces a host of new charges to use the scheme, with penalties for employers who make late payments into the scheme and caps on the benefits some members gain from large wage increases in the final three years before retirement.

The consultation document also details the rise in contributions expected from those enrolled in the NHS Pension Scheme from 1 April 2014, with a 1.2 percentage point increase in contributions for all members of the scheme earning over £49,473 per annum (full-time equivalent pay) in 2014/15.