Final pay control charges – are you due a refund?

05 November 2021

The Final Pay Control regulations are in place to protect the NHS Pension Scheme against the pension cost of excessive increases in pensionable pay by an employer and apply to the 1995 Section of the NHS Pension Scheme (including 1995/2015 transition members). If in the final three years of employment an employer gives a scheme member an increase in pensionable pay over the allowable amount, then a charge arises on them as the employer.

Changes have been made to the allowable amount this year and further exemptions added and, as these apply retrospectively, GP practices should check their position before 31 December 2021 – the deadline to pursue any refund of a charge. 

The allowable amount

A member’s pensionable pay can increase by an allowable amount in the last three years up to retirement but, if this allowance is exceeded, then a final pay charge is calculated and charged to the employer. Where there are two employers for the member, the liability applies to the one that increased the pensionable pay. 

The final pay calculation is triggered when a member’s AW8 retirement application form is submitted alongside the final pay control supplementary form. 

Consultation outcome and action to review

Following a consultation that concluded earlier this year, the allowable amount increased from 1 July 2021 to become the lesser of the:

  • Member’s pensionable pay in the relevant year, or
  • Member’s pensionable pay in the previous year plus CPI (consumer prices index) plus 7% (prior to 1 July 2021 4.5% plus CPI), or
  • Percentage increase in the member’s pensionable pay for the current year compared to the previous year.

New exemptions were added to the regulations from 1 July 2021 which include:

  • Nationally agreed contracts, framework agreements or re-banding where this is authorised under particular NHS terms and conditions
  • National Clinical Excellence Awards
  • Promotions following fair and open competition
  • The ending of a salary sacrifice arrangement
  • An increase in practice profits impacting non-GP providers (in certain scenarios).

Any calculations on or after 1 July 2021 will apply the revised increased percentages as well as the new exemptions. The increase to the percentage from 4.5% to 7% as well as the new exemptions are to be applied retrospectively to 1 April 2018.

31 December 2021 Deadline – Are you due a refund?

Due to the retrospective application of these changes, employers have until 31 December 2021 to request a review of a final pay control charge if they received an invoice or made payment for such a charge since 1 April 2018. Such reviews should result in a decrease to charges, therefore, this is an important deadline to meet – late applications will not be allowed for any reason. To request a review, complete a Final Pay Control reassessment application form at


If you would like assistance in reviewing final pay control charges you have received or to consider the impact of the final pay control regulations for future staff pay increases you are considering please get in touch with our team or your usual BDO contact.