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EPN389 - Employer Contribution Rates from April 2015

Audience: This notice will be of interest to: Finance Managers

Action: To: Prepare for higher employer pension contribution rates that will apply from April 2015, which are on average 2.2 percentage points higher than current rates.

Timing:

Routine

Background

    1. The employer pension contribution rates to the Principal Civil Service Pension Scheme which will apply from April 2015 are increasing from their current rates. The new rates will also apply to the new post-2015 scheme-alpha.
    2. This follows the completion of the 2012 scheme valuation. Further detail about the valuation can be found here.
    3. The average employer contribution rate currently paid is 18.9% and the new contribution rate will be, on average, 21.1%. You should note the average rate paid varies across each employer, depending on their salary structure as employer contribution rates are tiered by salary. Therefore the size of the financial impact of the change will be different for each employer depending on their workforce characteristics.
    4. The rates which will apply from April 2015 are set out in the table below.

      Table 1: PCSPS and post-2015 pension scheme (alpha) employer contribution rates.
      Member pensionable pay (£)*Employer pension contribution rate (%), 2015/16Employer pension contribution rate (%), 2014/15
      0 to 22,000 20.0 16.7
      22,001 to 44,500 20.9 18.8
      44,501 to 74,500  22.1  21.8 
      74,501 and above  24.5 24.3
      All prison officers with pre-Fresh Start pension  27.9 25.8 
    5. * A revalorisation exercise will be completed in order to set the final salary bands for 2015/16. This is expected to be completed early in 2015, so these salary bands are for indicative purposes only for 2015/16.

 

  1. An Employer Pension Notice containing the final salary bands will be issued to all employers in due course, which is expected to be in early 2015.
  2. It is possible that some employers which have outsourced employees after mid 2013 under new Fair Deal arrangements may have entered into contractual agreements whereby they (rather than the contractor) bear the risk of a change in employer contribution rates. If you have already entered into such arrangements (or intend to do so), you should ensure that your finance plans have factored in the higher contractual payments which will be a consequence of an increase in employer contribution rates.

Contacts

If you have a question about the distribution of EPNs or you need to receive them in a different format contact employerpensionnotice@cabinetoffice.gsi.gov.uk

You can find electronic copies of the Employers’ Pension Guide, all current EPNs and forms on our Employer section.

This notice is for employers and should not be issued to scheme members.

If members have a question about their pension they can find information on this site or by contacting your Pension Service Centre.