Government changes to National Insurance (NI) contributions will take effect from April 2016 and staff will see the result in their take-home pay this month. This affects you if you are below State Pension age and a member of one of the following pension schemes:
- The Universities Superannuation Scheme (USS)
- The Superannuation Arrangements of the University of London (SAUL)
- The Local Government Pension Scheme (LGPS)
- The National Health Service Pension Scheme (NHSPS)
For all other staff, NI contributions will not change.
What does this mean for USS, SAUL, LGPS and NHSPS members?
From 6 April, NI contributions will increase for all members.
NI contributions will:
- increase from 10.6% to 12% for the proportion of your salary that falls within £8,060 and £40,044
- remain at 12% for the proportion of your salary that falls within £40,044.01 and £43,000
- remain at 2% for the proportion of your salary that is above £43,000
You will no longer receive the 1.4% NI rebate.
Why is this happening?
These changes are a direct consequence of a change in the State Pension.
Currently, the State Pension consists of:
- the basic State Pension
- the Additional State Pension
The Additional State Pension is also known as the State Second Pension (S2P). It replaced the State Earnings Related Pension Scheme (SERPS).
Currently members of USS, SAUL, LGPS and NHSPS are contracted-out of the Additional State Pension and so pay NI at a lower rate.
If you reach State Pension age on or after 6 April 2016, a new State Pension will replace the existing basic and additional State Pension, which will end the practice of contracting-out. This means all staff will pay the same rate as they build up the new State Pension in addition to their workplace pension.
For further information on the changes and the effect on workplace pensions, see: