Date posted: 03/10/2017


  • Pension Leads & HR Managers
  • Pension Leads
  • HR Managers
  • Exit / Redundancy Leads
  • Finance Directors and Managers
  • Payroll Managers
  • All Employers


  • From 6 April 2018, the Scheme Administrator will not make cash payments to employees under the Civil Service Compensation Scheme (CSCS).
  • From 6 April 2018, employers will be responsible for making all cash exit payments under and over £30,000 and for deducting and paying HMRC any employer National Insurance and income tax due. 


  • You will need to arrange for your payroll or payroll providers to make cash exit payments from 6 April 2018, including deducting and paying HMRC employer National Insurance and income tax.
  • You should review your current accounting arrangements, and consider any changes that may be required.
  • You should review any planned exit dates around 6 April 2018 to ensure they do not incur unnecessary, additional costs.


  • Immediate


1. From 6 April 2018, employer (but not employee) National Insurance payments will be due on termination payments over £30,000 (including Voluntary Exit, Voluntary Redundancy, Compulsory Redundancy and inefficiency payments).

This is a change made by HM Treasury following the Finance Act 2017 and applies to all employers, not just Civil Service employers.

2. Any pension payment, for example Added Pension or buy-out of early access actuarial reduction, counts as a pension payment rather than a termination payment and does not count toward the £30,000 threshold.

Where pension payments are involved, for example Added Pension or pension buy-out, the procedures currently in place will continue.

The Scheme Administrator will continue to produce quotes of member exit entitlement but from 6 April 2018 employers will become responsible for making all cash exit payments, both under and over £30,000.

3. Transition

Whether or not a payment is liable for employer National Insurance will depend on when the payment is made. It is not related to last day of service or when the payment was due.

The principle will be that schemes with employee exits occurring before and after 6 April 2018 will treat all members in the same way. Therefore, the employer will make all payments, even those occurring before 6 April 2018.

However, there will be cases where this approach may have to be different. If you expect to have a scheme with exits before and after 6 April 2018, you should contact the Scheme Administrator using the contact details below to discuss your scheme.

4. Financial considerations

You may wish to review planned exit dates around 6 April 2018 to ensure they do not incur unnecessary, additional cost due to employer National Insurance payments being due on exits on or after 6 April 2018.

Although any additional administrative costs will be for individual employers to fund, the savings Civil Service Pensions will make by not administrating exit payments will be reflected in the overall employer pension contribution rate.

5. Next steps

You should prepare for your payroll to take over paying all cash exit payments, income tax and employer National Insurance contributions associated with exit payments over £30,000 to HMRC before 6 April 2018.

We will publish further information about the change, including roles, responsibilities and guidance regarding information sharing between employers and the Scheme Administrator in due course.

6. Contacts

If you need to speak to the Scheme Administrator about your exit scheme please contact

For Cabinet Office approval of new or revised VE schemes, in the usual way please contact

Other information

If you have a question about the distribution of EPNs, contact

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

3 October 2017
Last updated:
24 April 2023