Final pay controls are applicable to all members of the 1995 section of the NHS Pension who retire with entitlement to officer benefits.
Final pay controls are also applicable to all members of the 1995 section of the NHS Pension who transfer out of the scheme.
If you receive an increase to pensionable pay that exceeds the allowable amount in any of the final 3 years prior to last day of service, the employing authority who awarded the excess pay will be liable for a final pay control charge.
The allowable amount for any given year is calculated by increasing the preceding years pensionable pay by CPI + 7%.
NHS Pensions will identify when there has been a pensionable pay increase in excess of the allowable amount, calculate any charges due from the Employing Authority (EA) and collect payment of the charge. When a charge is applicable, an invoice will be sent to the employer after the members award has been processed.
Final pay control only applies to pay rises awarded after 1 April 2014. Pay increase dates are not currently recorded on members records therefore this information will be manually requested from employers if an excess pay increase is suspected.
Final pay control will not apply to death benefits and will not be applied to pensionable pay increases that occurred before 1 April 2014.
Where there are two or more employing authorities the charge will be made to the authority that increased the pensionable pay only. These are classed as unconnected employments.
Where there are multiple employments under the same EA code and there is no break or a break of less than 365 days between pensionable employments, these will be classed as connected employments and the charge will apply to all the pensionable employments.
Salary sacrifice (for example lease car hire) is not excluded from the charges and will continue to reckon towards excessive pay increases. However, the EA will not be charged for any pay increase made on or after 1 April 2014 that is caused by salary sacrifice arrangements which started before this date.
Pay control examples and charges can be found on the Final Pay Control Factsheet available on the NHS Pensions website.