NHS Shared Business Services NHS Shared Business Services

NHS Pensions Scheme By the end of this presentation you should be able to answer the following questions: Which section/s of the NHS Pension Scheme am I in? The normal retirement age for NHS Pension Scheme Benefits? Do I have full, tapered or no protection? If I have tapered or no protection. Do I know the date I will join the 2015 NHS Pension Scheme?

Topics Checking your payslip NHS Pension Schemes Contributions Pensions Scheme Benefits Pensions changes if you do not meet normal retirement age Additional Pensions Benefits Applying for retirement benefits Working after retirement 2015 Scheme Choice 2 Questions

Checking your payslip

NHS Pension Schemes Two Sections of the Scheme from 1 April 2008 1995 Section – Based on 80ths for scheme members at 31 March 2008 and re-entrants with less than 5 years break in membership. 2008 Section – Based on 60ths for all new starters from 1 April 2008 and re-entrants with 5 years or more break in membership. New NHS Pension Scheme from 1 April 2015 Both sections and the 2015 Scheme provide index linked pensions 1995 and 2008 sections are based on Final Salary 2015 Scheme is a career average revalued earnings (CARE)

NHS Pensions Scheme - Contributions Earnings 1 Rate 2 Relief 3 14.3% 4 Contributions are linked to your earnings Rate of contributions dependant on full time earnings, or equivalent amount if working part time Tax relief on contributions Employer pays 14.3% from 1 April 2015

Contribution Rates Tier Full-time pensionable pay/earnings used to determine contribution rate Contribution Rate (before tax relief) (gross) 1 April 2015 - 31 March 2019 1 Up to £15,431.99 5% 2 £15,432.00 to £21,477.99 5.6% 3 £21,478.00 to £26,823.99 7.1% 4 £26,824.00 to £47,845.99 9.3% 5 £47,846.00 to £70,630.99 12.5% 6 £70,631.00 to £111,376.99 13.5% 7 £111,377.00 and over 14.5%

Opt out and Refunds To opt out form SD502 needs to be completed Form is obtained from NHS Pensions website If member opts out or leaves NHS employment with less than 2 years membership a refund can be requested To apply for a refund of pension contributions form RF12 is required NHS Pensions provide a breakdown of the refund

Pension Scheme Benefits Age retirement Whole time Part time Normal retirement age is 60 for 1995 section (55 for special classes) & 65 for 2008 section Calculating benefits for someone working whole time Calculating benefits for someone working part time

Age retirement Normal retirement age is 60 for 1995 section (55 for special classes) & 65 for 2008 section 1995 Section – Pension and Lump Sum based on best of last 3 years pensionable pay - lump sum is normally 3 times the annual pension 2008 Section – Pension based on the average of the best 3 consecutive years pensionable pay in the last 10 - no automatic lump sum Both sections has the option to give up some of the annual pension in exchange for a lump sum For every £1 of annual pension you give up you would receive an additional £12 lump sum subject to the maximum

NHS Pension Scheme For members of the 1995 and 2008 sections pension benefits are based on: Your pensionable or reckonable pay at or near retirement The amount of whole time equivalent membership accrued

NHS Pension Scheme – Whole Time 1995/2008 Membership History An Employee – SD 75/123456 From To Contract Years Days 01/02/1999 31/03/2006 Whole Time 7 59 01/04/2006 31/03/2014 8 Total Membership 15

Calculating Your Pension – Whole Time NHS Pensions Scheme (1995 section) Pensionable pay = £25,000.00 Membership = 15 years 59 days = 5,534 days 80 years x 365 = 29,200 days Pension Benefit Calculation £25,000.00 x 5,534 = £4,738.01 Annual Pension 29,200 £14,214.03 Lump Sum (usually 3 x Annual Pension) Survivor’s Pension

Calculating Your Pension – Whole Time NHS Pensions Scheme (2008 section) Pensionable pay = £25,000.00 Membership = 15 years 59 days = 5,534 days 60 years x 365 = 21,900 days Pension Benefit Calculation £25,000.00 x 5,534 = £6,317.35 Annual Pension 21,900 £0 Lump Sum Survivor’s Pension

NHS Pension Scheme – Part Time 1995/2008 Membership History An Employee – SD 75/123456 From To Contract Years Days 01/02/1999 31/03/2006 Whole Time 7 59 01/04/2006 31/03/2014 Part Time 4 Total Membership 11

Calculating Your Pension – Part Time NHS Pensions Scheme (1995 section) Notional Whole Time = £25,000.00 Membership = 11 years 59 days = 4,074 days 80 years x 365 = 29,200 days Pension Benefit Calculation £25,000.00 x 4,074 = £3,488.01 Annual Pension 29,200 £10,464.03 Lump Sum (usually 3 x Annual Pension) Survivor’s Pension

Calculating Your Pension – Part Time NHS Pensions Scheme (2008 section) Notional Whole Time = £25,000.00 Membership = 11 years 59 days = 4,074 days 60 years x 365 = 21,900 days Pension Benefit Calculation £25,000.00 x 4,074 = £4,650.68 Annual Pension 21,900 £0 Lump Sum Survivor’s Pension

Pensions changes – do not meet retirement age Voluntary early retirement Ill Health retirement Life assurance and family benefits Redundancy benefits Draw Down

NHS Pension Scheme – Voluntary Early Retirement Voluntary Early Retirement (VER) is available to members over the minimum retirement age 1995 Section – Minimum retirement age is 50 except for members who joined the scheme on or after 6 April 2006, their minimum retirement age is 55 2008 Section – Minimum retirement age is 55 Pension benefits are reduced for being paid early Reduced pension must exceed the Guaranteed Minimum Pension (GMP) for membership up to 6 April 1997 A member of the NHS Pension Scheme is contracted out of the State Second Scheme (SERPS) GMP tests if NHS pension scheme benefits pre 1997 are at least the amount member would have received from State Second Scheme

NHS Pension Scheme – Ill Health Retirement Must have 2 years pensionable membership 2 Tier arrangement Tier 1 – Unable to carry out current duties – can receive pension benefits accrued without enhancement Tier 2 – Unable to engage in any regular employment – can receive an enhanced pension AW33E Form – Requested by HR

NHS Pension Scheme – Life Assurance and Family Benefits From first day of joining NHS Pension Scheme a life assurance lump sum is payable equal to 2 years pensionable pay Payable automatically to a spouse or registered civil partner Regardless of marital status anyone can be nominated using form DB2 Survivor’s Pension Payable to spouse, civil partner or nominated partner (form PN1) for life Dependant/Child benefits may be payable Dependant child allowance paid until age 23 (subject to dependency rules)

Redundancy Benefits If under minimum pension age you would: Receive a redundancy payment based on one months pay for each complete year of continuous service up to a maximum of 24 years Pension benefits would be deferred If over minimum pension age you would have a choice: A redundancy payment based on one months pay for each complete year of continuous service up to a maximum of 24 years NHS Pension benefits taken early without reduction - capitalised costs deducted from redundancy pay

NHS Pension Scheme – Draw Down 2008 Section: Option to take partial retirement from age 55 and take some of your benefits if you reduce your pensionable pay by 10% by: Reducing working time or Switching to a less demanding role You can take between 20% and 80% of your pension entitlement and continue to build up future membership The benefits would be reduced if they are taken before your 65th birthday Option to drawn down benefits twice before retiring completely

NHS Pension Scheme – Transfer of Pension Rights Transfer in to NHS Scheme must be initiated within first 12 months 1995 section - of joining the scheme 2008 section – of becoming eligible to join the scheme

NHS Pension Scheme – Increasing your benefits Added years contracts increases membership Ceased 31 March 2008 Existing contract to be fulfilled Additional Pension Purchased in multiples of £250 annual pension Payable by lump sum or instalments Other additional voluntary contribution contracts – Standard Life, Prudential, Personal Pension etc

Protection Of Pay You have accrued at least 2 years membership Organisational Change – through no fault of the member 1995 and 2008 Section Downgraded to a lower paid employment Application form needed within 3 months of the change After redundancy if returning to a lower paid job within a year Voluntary Pay Protection (VPP) - 1995 Section Only A member must have stepped down to a less demanding role Over minimum pension age More than 10% reduction in whole time equivalent pensionable pay for at least one year Application form needed within 12 to 15 months of the change

Applying for Retirement Benefits To claim your NHS Pension Scheme Benefits form AW8 is required Estimate (Commutation) NHS Pensions require four months notice Contact NHS SBS Employment Services Desk on 0300 123 1144 NHS SBS calculate reckonable pensionable pay and submit to NHS Pensions NHS Pensions calculate pension benefits due Equiniti Paymaster pay the NHS Pension Pay in Lieu of Annual Leave extends your membership of the NHS Pension Scheme

Working After Retirement Terminate employment Have a break in employment (minimum of 24 hours or one calendar month). Consider your local policy/arrangements Re-employed on a new contract 1995 Section - No more than 16 hours per week in first month following retirement If you are ‘Special Class’ and retire before age 60 the sum of your pension and the pay in your new job must not exceed your earnings prior to retirement New employment will not be pensionable – if retiring from 1995 section unless retirement date between 1 April 2008 to 30 September 2009 this excludes organisations who have closed direction status New employment can be pensionable – if retiring from 2008 section this excludes organisations who have closed direction status

2015 NHS Pension Scheme This is a career average revalued earnings scheme rather than final salary for pension benefits An accrual rate of 1/54th of pensionable earnings with no limit on pensionable membership A normal pension age equal to the State Pension Age Each year of pensionable pay counts separately towards the build up of final pension benefits Pensionable earnings increase in line with CPI plus 1.50% Entering into any salary sacrifice arrangement that reduces pensionable pay will have a negative effect on the amount of pension built up in that year Early retirement reduction buy out

2015 Calculation

2015 Calculation

Choice2 A key component of the 2015 NHS Pension Scheme is a higher normal pension age Had this information been available at the commencement of the previous Choice exercise, some members may not have elected to remain in the 1995 section This resulted in a decision, in the interests of fairness and members making the most of their pre 2015 benefits, to provide those affected with another opportunity to decide whether to move their 1995 section membership to the 2008 section - this exercise is known as Choice2

Choice2 If you have Full Protection – within 10 years of your Normal Retirement Age at 1 April 2012 you will remain in the 1995 or 2008 section of the NHS Pension Scheme If you have Tapered Protection – within 10 years to 13 years 5 months of your Normal Retirement Age at 1 April 2012 you will have a specified date when you will move to the 2015 scheme If you have No Protection – if you were more than 13 years 5 months from your Normal Retirement Age at 1 April 2012 you will move to the 2015 scheme on 1 April 2015

Choice2 Tapered and No Protection Be a contributing member of the 1995 section. NHS Business Services Authority (NHSBSA) have produced personalised letters for each eligible member Members will need to read their Choice2 letter in full to understand the implications and are encouraged through their letters to make use of the online calculators and examples The deadline for NHS Pensions to receive Choice2 decisions will be confirmed in the letter and once a member has made a decision it cannot be changed

Choice 2 Decision Tree

Can you answer these questions? Do you know which section/s of the NHS Pension Scheme you are in? Do you know your Normal Retirement Age for NHS Pension Scheme Benefits? Do you have Full, Tapered or No Protection? If you have Tapered or No Protection do you know the date you will join the 2015 NHS Pension Scheme?

More Information Members newsletter: nhsbsa.pensionsmembernewsletter@nhs.net Total Reward Statements: ESR Self Service or Government Gateway NHS Pensions website: www.nhsbsa.nhs.uk/pensions NHS Pensions Helpline: 0300 3301 346 NHS Employers website: www.nhsemployers.org Employment Services Desk: 0303 123 1144 or sbs.esd@nhs.net

Any Questions?