NHS Pensions operate using tiers, where employees' contributions are based on their earnings.

From 1 April 2024 these tiers are changing. When you process from this date, you need to ensure you assign your employees the correct tier, and set your employer contributions.

Sage 50 Payroll v30 is now available, and you can find out how to process these changes below. If you haven't updated your software yet, you can download and install the Sage 50 payroll year end update now.

Tiers

There are 11 NHS pension tiers in use in the 2023/2024 tax year, which reduces down to six tiers from 1 April 2024. If you'd like to view the tiers, click the following options:

• Tiers for 31 March 2024 and before >

  Tier	Pensionable pay from	Pensionable pay to	Employee contribution rate
  1	£0.01	£13,246.99	5.1%
  2	£13,247.00	£17,693.99	5.7%
  3	£17,674.00	£24,022.99	6.1%
  4	£24,023.00	£25,146.99	6.8%
  5	£25,147.00	£29,635.99	7.7%
  6	£29,636.00	£30,638.99	8.8%
  7	£30,639.00	£45,996.99	9.8%
  8	£45,997.00	£51,708.99	10.0%
  9	£51,709.00	£58,972.99	11.6%
  10	£58,973.00	£75,632.99	12.5%
  11	£75,633.00	And above	13.5%

  The employer contribution calculated in payroll is 14.38% for all tiers above.

• Tiers from 1 April 2024 >

  The Government have announced that the new NHS pension thresholds have been increased in line with Consumer Price Index (CPI). The thresholds below are updated, and are included in Sage 50 Payroll v30.

  Tier	Pensionable pay from	Pensionable pay to	Employee contribution rate	Employer contribution rate (non-medical school)	Employer contribution rate (medical school)
  1	£0.00	£13,259.99	5.2%	14.38%*	14.84%*
  2	£13,260.00	£26,831.99	6.5%	14.38%*	14.84%*
  3	£26,832.00	£32,691.99	8.3%	14.38%*	14.84%*
  4	£32,692.00	£49,078.99	9.8%	14.38%*	14.84%*
  5	£49,079.00	£62,924.99	10.7%	14.38%*	14.84%*
  6	£62,925.00	And above	12.5%	14.38%*	14.84%*

  *The actual Employer contribution rate is 23.7%, but the NHS Business Service Authority will only collect 14.3% from employers or 14.76% from medical schools. They also charge a 0.08% admin charge, which is included in the contribution rates above, and in Sage 50 Payroll v30.

  This is then topped up by 9.4% for employers or 8.94% for medical schools by NHS England and the Department of Health and Social Care.

Employer contributions

A change to employer contributions is also coming into effect. There'll be two different employer contribution rates.

The rate you should calculate depends on whether or not your business is classed as a medical school. The rates are:

• 14.38% for non medical schools
• 14.84% for medical schools

If you're not certain which category your business fits into, contact either your Pension administrator, or NHS Pensions for advice.

You must set whether your business is a medical school or not before you process a payroll with process date 1 April 2024 or after. Continue to the processing the changes section for more information.

Processing the changes

Sage 50 Payroll v30 includes both the old and new tiers. When you click NHS Pension Tiers your software uses your process date to apply the correct tiers.

When you process a pay run with process date 1 April or after you must ensure you set the correct tier for each employee. The tier changes are significant, so it's likely you'll need to assign a new tier to many of your employees.

Set employer contributions

Before you assess and amend NHS Pension tiers for a process date on or after 1 April, you must set the correct employer contributions.

1. Set your process date to 01/04/2024 or after.
    NOTE: The rate 14.84% for medical schools is only available in the next Step when the process date is set to 1 April 2024 or after. 
2. Click Company, then NHS Pensions Settings.
3. Click the dropdown box beside Show tiers for, and select the relevant option:
   • NHS Employer
   • Medical School
      NOTE: If you're not sure which option to select, contact NHS Pensions or your Pension Administrator for advice. 
4. Click Save.

You've now set the employer contribution rate. To apply this in your software's pension calculations, you must click Save in NHS Pension Tiers, even in the unlikely case that you don't need to change any employees' tiers.

Assess and assign tiers

The NHS Pensions Module works as normal, but with the new pension tiers applied based on the processing date.

1. When you're ready to process your first pay date on or after 1 April 2024, check your process date is set correctly.
2. Select the relevant employees on your employee list.
3. Click Payroll, then NHS Pension Tiers.
4. Review the recommendations and decide which tier is correct for the employee as normal.
5. Click the Tier to apply dropdown and select the required tier.
6. Select the next employee and repeat Steps 4 to 6 until all employees are checked and updated as required.
7. Click Save.
    NOTE: You must click Save to retain any tier changes you make, and to calculate Employer contributions as you set in the set employer contributions section above.

Click NHS Pension Contributions if you'd like to review the contribution values, and you can then continue to process your payroll as normal.

Processing NHS Pensions

If you'd like more information on the NHS pension Module, visit our guides below:

• How do I process using the NHS Pensions Module? >
• NHS Pensions - Common Questions >

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