1. Barnet, Enfield and Haringey Mental Health Trust
2015 Scheme and Choice 2
Barnet, Enfield and Haringey Mental Health Trust

2. Your Pension Team Rebekah Graham – Lead Pension Administrator
Eddie West – Pension Administrator
Emma Mitchell – Pension Administrator
Equiniti-ICS
205 Airport Road West
Belfast
BT3 9ED

3. What we will cover today
Brief outline of the new 2015 Scheme
Pension Choice 2 exercise

4. 2015 Scheme Changes

5. Public Sector Pension Reform
Hutton Report found Public Sector pensions to be unaffordable
Accepted by the Coalition Government
Original amendments to NHS Pension Scheme rejected by Unions
Improved offer accepted December 2011
Changes take effect from 1st April 2015

6. DISCLAIMER!
At present, only limited information is known about the new arrangements, which are still under design and discussion with NHS Staff representatives
Details that follow are based on information available at current time
Any further changes will be communicated by NHS Pensions prior to April 2015

7. Key Changes
Move from Final Salary to Career Average Revalued Earnings (CARE)
Normal Pension Age linked to State Pension Age
Accrual rate increased to 1/54th
Revaluation of benefits increased by CPI + 1.5%
Protection arrangements - full protection, no protection or partial protection

8. Full Protection
Members within 10 years of NRA at 1st April 2012 will not move to the new Scheme
1995 Section- age 50 or over at 01/04/2012
Age 45 or over for those with Special Class Status
2008 Section – Age 55 or over at 01/04/2012

9. Tapered Protection
Partial protection for those between 10 and 13.5 years of NPA at 01/04/2012
Entry to the new Scheme will be delayed on a sliding scale
Date of birth
Age at 01/04/2012
Member Type
Before 01/10/1970
41 ½
Special Class
Before 01/10/1965
46 ½
1995 Section
Before 01/10/1960
51 ½
2008 Section

10. No Protection
Members will have no protection if they fall outside the dates of parameters set (have more than 13 ½ years to normal retirement age) and will move to the new Section as of 01/04/2015.

11. Career Average Revalued Earnings (CARE)
Each years pensionable pay divided by the accrual rate (1/54th)
Value of pension at the end of the year is then “banked”
Previous years pension increased at the rate of Consumer Price Index (CPI) + 1.5%

12. CARE: A simple example
The following example is based on a member earning £18,000 a year. For the purpose of this simple example, we assume that the pay does not change year on year. * Re-valued at 3.5% assuming 2% CPI + 1.5%
Year 1
Year 2
Year 3
Year 4
Year 1 pension
£333
£345*
£357*
£369*
Year 2 pension
N/A
Year 3 pension
Year 4 pension
Total pension to date
£678
£1,035
£1,404

13. Re-employment after Retirement
1995
2008
2015
Retire at age 60 (NRA)
Retire at age 65 (NRA)
Retire at SPA
24 hour break in service
No more than 16 hours per week in 1st calendar month
16hr rule does not apply
No further Scheme membership permitted
Further 2008 scheme membership is permitted
Further 2015 scheme membership is permitted
*Re-employment after retirement is subject to the Trust agreement for a contract available for you *

14. Early Retirement Reduction Buy Out (ERRBO)
If you move across to the 2015 Scheme, you face an increase in your NRA as this is now linked to SPA
You can elect to pay more now to fund an early retirement and bring your ‘new retirement age’ forward by up to a maximum of 3 years by paying additional contributions now
Periodically the additional contribution rates will be reviewed and may change during the period of employment
A contract can only be started at each financial year (request must be made within 3 months of the scheme year commencing)
This calculation is completed by NHS Pensions and all members must contact NHS Pensions directly
There will be a provision where the employer can fund this on behalf of a member and pay the contributions on their behalf

15. Breaks in Membership
– break of 5 years or less calculated at final salary at retirement
– break of more than 5 years ended on or after 01/04/2015, pension will be calculated on final salary before break plus CPI
2015 – break of 5 years or less, pension revalued at CPI +1.5%
2015 – break of more than 5 years, pension revalued at CPI only

16. Preserved rights – Mental health Officers (MHO’s)
MHO members who are not eligible for full protection will move to the new Scheme on 1 April 2015 or at a specified later date.
On moving to the 2015 Scheme there will be no further accrual of MHO entitlement because, like the 2008 section, there is no MHO provision in the Scheme.
However, provided the member could have achieved at least 21 calendar years as an MHO by age 55, the value of the previous MHO membership will be maintained by the automatic application of the Uniform Accrual Formula (UAF), as this will always provide higher Preserved Rights benefits.

17. How does the UAF calculation work?
The UAF calculation works by increasing the amount of benefit that would otherwise be payable by a proportion of the extra benefit that you would have earned had you remained as a MHO until retirement (including any doubled years). The proportion is equal to the ratio of your MHO membership to your total potential membership to age 55 (excluding any doubled years).
The formula for UAF is:
final year pensionable pay x actual MHO membership (A) x total potential membership to
80 (accrual rate) potential membership to age 55 (B) age 55 (C)

18. UAF calculation example
This member continued in an MHO qualifying post to age 55.
When Mary moves to the 2015 Scheme she will have been an MHO for 14 years (A).
If Mary had been able to remain in the 1995 section and remained in MHO qualifying posts she would, by the time she reaches age 55, have built up MHO membership of 26 years (B).
Mary would therefore qualify for 6 ‘doubled years’ making her total membership (at age 55) 32 years (C).
Assuming that Mary has not had a break of 5 or more years and her final years’ pensionable pay (at age 55) is £35,000, the UAF calculation would be:
 £35,000     x    (A) 14    x   (C) 32 = £7,538 pension       80               (B) 26
A standard Preserved Rights benefit calculation would be:
 £35,000    x      14   =   £6,125 pension       80
Mary would automatically receive a Preserved Rights pension based on the UAF calculation.

19. Normal Pension Ages 1995 Section- Age 60 (55 for special classes)
CARE – Linked to State Pension Age
State Pension age can be checked at:

20. Pensionable Membership and Age Limit
Membership for employees with Special Classes / MHO’s in the 1995 Section – 40 years at age 55 and 45 years overall
Non MHO and Non Special Class members in the 1995 Section – membership is restricted to 45 years in total
All employees in the 2008 Section – membership is restricted to 45 years in total
There are no restrictions to total years membership in the 2015 Scheme
Maximum age in all Sections is 75 (with the exception of MHO and Special Class members who cannot be in the scheme beyond age 65)

21. Benefits accrued up to the date you move into the 2015 Scheme
Benefits accrued in the 1995 section and 2008 section will be protected up until the date you move across to 2015 Scheme
You may be able to draw pension at NRA of 55/ 60/ 65 under the terms and conditions of the section you are in (1995 / 2008)
Benefits will be assessed on pensionable service at the date before you move across (either 31/03/2015 or a later date) and final salary at retirement date
In effect members will have 2 (or possibly 3) parts to their pension

22. Preserved Rights
Preserved Rights are the pension benefits that members who are not entitled to full Protection have built up in the 1995 or 2008 sections of the NHS Pension Scheme before moving to the new 2015 Scheme. At retirement, these benefits will be treated separately and calculated in accordance with the rules of the 1995/2008 sections, as appropriate. Provided you have not had a break in scheme membership of 5 or more years that ended on or after 1 April 2015, your benefits will be calculated on your final salary at or near retirement.

23. Examples of Preserved Rights
The following two examples illustrate how preserved rights are calculated:
Example 1
Danny joined the Scheme in 2005, so he was in the 1995 section for 10 years before moving to the 2015 Scheme (age 42 at 01/04/2012). He has no breaks in his membership of 5 or more years and retires at age 60 in 2030.
Danny’s Preserved Rights for benefits for the period 2005 to 2015 are calculated in accordance with the rules of the 1995 section and based on his ‘Final Year’s Pensionable Pay’ as at his retirement in 2030 (pensionable pay in the final twelve months or in either of the two preceding years if higher).
Danny’s benefits for the period 2015 to 2030 are calculated in accordance with the rules of the 2015 Scheme.

24. Options available to Danny
Age 50 – 59 – can claim Actuarially Reduced Pension for 1995 Section and defer scheme benefits until reaching age 55 when can claim Actuarially Reduced Pension for 2015 Scheme
Age 60 – claim 1995 pension benefits plus 2015 reduced pension benefits because claiming 7 years earlier (SPA age 67)
Age 60 – Claim 1995 pension benefits only and preserve 2015 pension benefits to claim at SPA (Danny will have to leave work in order to collect 1995 benefits)
Age 67 – Claim both 1995 and 2015 pension benefits. No reduction to scheme benefits but would have waited 7 years to collect 1995 pension benefits
Age 67 plus – Late retirement factors apply to 2015 scheme benefits
NOTE: section member returning to NHS employment after 24 hour break will
not be allowed to re-join pension scheme

25. Examples of Preserved Rights
Alexandra joined the Scheme in 2008, so she was in the 2008 section for 7 years before moving to the 2015 Scheme (age 42 at 01/04/2012). She has no breaks in her membership of 5 or more years and retires at age 65 in 2035.
Alexandra’s Preserved Rights for benefits for the period 2008 to 2015 are calculated in accordance with the rules of the 2008 section and based on her ‘Reckonable Pay’ as at her retirement in 2035 (the average of the best consecutive three years pensionable pay out of the final ten years prior to retirement).
Alexandra’s benefits for the period 2015 to 2035 are calculated in accordance with the rules of the 2015 Scheme.

26. Options available to Alexandra
Age 55 – 64 – Claim both 2008 and 2015 Section pension benefits but these will be Actuarially Reduced as taken earlier than NRA in both Schemes
Age 65 – Claim 2008 pension benefits plus 2015 reduced pension benefits because claiming 2 years earlier (SPA age 67)
Age 65 – Claim 2008 pension benefits plus 2015 pension benefits if buy out option taken
Age 65 – Claim 2008 pension benefits only and preserve 2015 pension benefits to collect at SPA
Age 67 – Claim both 2008 and 2015 pension benefits. No reduction to Scheme benefits but would have waited 2 years to collect 2008 pension benefits which would include 2 years of late retirement factors
Age 67 plus – Late retirement factors apply to both 2008 and 2015 scheme benefits
NOTE: 2008 Section member returning to NHS employment after 24 hour break
maybe eligible to re-join 2015 scheme

27. Literature

28. Choice 2

29. What is Choice 2?
You have received a letter because you have been identified as someone who could benefit from moving your 1995 Section benefits to the 2008 Section of the current Scheme. Whether you would or not will depend on the age when you retire and draw your benefits and whether you remain in NHS employment until then. Only you can know what your plans are.
You may recall a few years ago that you were offered an opportunity under the original Choice exercise to decide whether to stay in the 1995 Section or to move your benefits to the 2008 Section. You are now being given a further opportunity to move your benefits under this Choice exercise because things are changing which might affect your plans and what is best for you.

30. Choice 2
1995 section members without full protection will have the choice to move their membership to 2008 section (members who have no protection or partial protection)
No impact on members with full protection
Members have now received their letters and have until 16/03/2015 to make a decision

31. The main differences between the 1995 and 2008 Sections
Choice 2 relates to moving your membership from the 1995 Section to the Section of the NHS Pension Scheme. It is therefore crucial that you understand the differences between these two Sections.
The following table on the next few slides summarise these differences. You should consider these carefully but remember not to consider any one of these points in isolation. It is important that you weigh up your overall plans to suit your career, lifestyle, earnings and retirement plans.

32. Main comparison of differences between the 2 sections
Benefit or Feature
1995 Section
2008 Section
Normal Pension Age (NPA)
60 (55 for Special Class or MHO Members) 65
Minimum Pension Age (MPA) for early retirement 50 55
Pension and lump sum at NPA
Annual pension = 1/80th of final years pay for each year of membership and pro rata for each part year plus a pension of three times the annual pension
Annual Pension equals 1/60th of your reckonable pay for each year of membership (and pro - rata for each part year) minus the amount needed to pay for the mandatory lump sum which is paid in addition to your pension.

33. Benefit or Feature
1995 Section
2008 Section
Pay used to calculate your benefits
Normally the best pensionable pay you have received in any of the last three years before retirement. This is known as your “final year’s pensionable pay”.
The annual average of the best three consecutive years of
pensionable pay in the last ten years, re - valued by pensions
increase. This is known
as your reckonable pay.
Added Years
If you already have an added years contract it can normally
continue until the contract end date.
Not available - if you have an added years contract and choose to move across to the
2008 Section then your added year’s contract will finish on 31 March The extra
membership that you have bought up to that point will be added to your 2008 Section
membership.

34. Benefit or feature
1995 Section
2008 Section
Special Class Officers
Subject to certain conditions can retire at age 55 with unreduced
benefits
No equivalent provision in the 2008 Section. If you decide to move your benefits to the 2008 Section you will lose the right to retire early with unreduced benefits
Mental Health Officers (MHO)
Subject to certain conditions can retire at age 55 with unreduced benefits. In addition, MHOs who have at
least 21 years MHO membership receive doubled years for each complete year after 20.
No equivalent provision in the 2008 Section. If you do decide to move your benefits to the 2008 Section you will lose the right to retire early with unreduced benefits. No equivalent provision in the 2008 Section exists. You will
therefore lose any doubled years and the right to have your final benefits calculated using the ‘Uniform Accrual
Formula’

35. Other information to consider
If you decide to move your 1995 Section benefits into the 2008 Section you will give up the potential opportunity to retire at your current NPA and claim five years worth of unreduced pension benefits. This is because the normal pension age in the 1995 Section is age 60 but the normal pension age in the 2008 Section is age 65.
If you currently hold Special Class or Mental Health Officer status and decide to move your 1995 Section benefits into the 2008 Section you will give up the right to potentially retire at age 55 without reduction of your benefits for early payment. Also if you have achieved or could achieve 21 years or more membership as a MHO by 31 March 2015 you will lose any ‘doubled’ years and the right to have your final benefits calculated using the ‘Uniform Accrual Formula’.

36. Contact NHS Pensions Further help
If you wish to contact NHS Pensions about Choice 2 there is a dedicated help line, , to answer any questions you might have. The opening times are 8:00-18:00 Monday to Friday, calls will be charged at local rates.
They have also provided an account for Choice 2 for members and employers:

37. Useful links NHS Pensions: www.nhsbsa.nhs.uk/pensions
State Pensions Age calculator:
2015 Scheme information:
Choice 2 information:

38. Questions? Please contact your pensions team
Rebekah Graham – Lead Pension Administrator
Eddie West – Pension Administrator
Emma Mitchell – Pension Administrator