Independent Providers of health services: NHS membership for previously non-qualifying staff

Published by Mark Norquay on

The NHS Pension Scheme (NHSPS) considers an employer an Independent Provider (IP) if it holds Standard, APMS, or local authority NHS contract.  Since 1 April 2014 IPs are able to apply to become an Employing Authority in the NHSPS, enabling all of their eligible employees to be members of the NHSPS, not only those whose employment was TUPE transferred from the NHS.

There are two tiers of NHSPS access – open or closed:

Open access

All eligible employees are able to join the NHSPS post transfer.

Closed access

Only those employees that were previously in or entitled to join the NHSPS are able to join the NHSPS post transfer.

"All employers are required to contribute the standard employer rate of pensionable pay in respect of the employees in the NHSPS. However, they could also be required to meet the past service cost of pay rises if the NHSPS consider them excessive or, for example, any redundancy costs that may arise."

Under New Fair Deal, contractors are granted closed access to the NHSPS by default (unless they have previously been granted open access).  If they would like open access then they have to apply for this separately.  Except in special circumstances, it is expected that the same type of access (open or closed) will apply to all contracts, so employers cannot pick and choose from one contract to another.

The employer is responsible for administering the benefits of these employees and providing annual information in the form of a certificate to the NHSPS in order to assist with record keeping and to ensure the employer is acting correctly.

All employers are required to contribute the standard employer rate of pensionable pay in respect of the employees in the NHSPS.  However, they could also be required to meet the past service cost of pay rises if the NHSPS consider them excessive or, for example, any redundancy costs that may arise.

The NHSPS may require the employer to provide a contribution guarantee of between 100% and 110% of 3/12ths of a reasonable estimate of the total annual contribution liability.

An employer’s decision whether to apply for open access to the NHSPS will depend on its current pension arrangements for staff that are not currently eligible to join the NHSPS, but would be under open access.  Employers might currently provide these staff with defined contribution (DC) pension arrangements with relatively low employer contributions.  In which case, open access to the NHSPS would improve staff pensions, but also increase the employer’s pension costs.  If, however, their pensions are currently provided through a standalone defined benefit (DB) scheme, or insured DB arrangement, then open access could reduce the employer’s pension costs.

If you represent an Independent Provider of health services and would like to discuss issues relating to participation in the NHS Pension Scheme then please contact us.