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NHS Pension Scheme 2015

NHS Pension Scheme 2015. Presentation prepared by the Scottish NHS Pensions Group. What is happening?. From 1 April 2015 the current NHS superannuation scheme will be closed and members will move to a new scheme except -

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NHS Pension Scheme 2015

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  1. NHS Pension Scheme 2015 Presentation prepared by the Scottish NHS Pensions Group

  2. What is happening? • From 1 April 2015 the current NHS superannuation scheme will be closed and members will move to a new scheme except - • Active members within 10 years of their Normal pension age as at 1 April 2012 (who will be fully protected and will not have to move) • Active members within a further 3 years 5 months of normal pension age as at 1 April 2012 (who will have some protection and may delay their move to the 2015 Scheme)

  3. Why is this happening? • Hutton Report 2011 • The Public Services Pensions Act 2013

  4. What will the new scheme look like? Main changes: • Career Average Revalued Earnings (CARE) • Normal pension age will be linked to member’s state pension age • An accrual rate of 1/54th of pensionable earnings each year with no limit on pensionable service. • Revaluation of active member’s benefits increased in line with CPI plus 1.5 per cent. (Deferred benefits increase with CPI) • Other changes as set out in the “Scottish Framework document”

  5. What is a CARE scheme? • In a CARE scheme your pension is based on your pensionable pay right across your career. • The pension you earn each year (1/54th of pensionable pay or earnings) is increased by a set revaluation rate, linked to inflation, for each year up to retirement or leaving. • The final pension is calculated by adding together the pension earned in each year of membership.

  6. CARE Example Year 1 Member earns £27,000 1/54th = £500 Total pension pot for year 1 = £500 Year 2 Member earns £27,000 1/54th = £500 add to year 1 (£500 uprated by CPI+1.5% (CPI for this year is 3.5%) i.e. 5% = £525) Total pension pot for year 2 is £500 + £525 = £1025 Year 3 Member earns £28,000 1/54th = £518.50 add to years 1+2 total £1025 (uprated by CPI + 1.5% (CPI for this year is 3%) i.e. 4.5% = (£1025 + £46.13 = £1071.13) Total pension pot for year 3 is £518.50+ £1071.13 = £1589.63 This continues until the member retires Pension at retirement therefore = total accrued pension per annum

  7. Other Features of NHS Scheme from 2015 • Member contributions on a tiered basis (HM Treasury requirement that contributions overall deliver a yield of 9.8% of total pensionable pay) • Option to pay additional contributions to fund early retirement • Added years and Additional Pension contracts from 1995 section will continue on compulsory transfer to 2015 scheme. • Spouse and Partner pensions based on accrual rate of 1/160th

  8. Other Features of NHS Scheme from 2015(continued) • Early and late retirement factors • Option for partial retirement available as 2008 section • Additional Pension facility • Optional lump sum commutation at rate of £12 of lump sum for every £1 per annum pension given up (up to HMRC limit of 25%) • Lump sum on death in service 2 x actual pensionable pay • Abatement same as post 1 April 2008 arrangements • Ill health pensions based on current arrangements but upper tier based on enhancement of 50% of prospective service to normal retirement age

  9. What about Benefits I’ve already accrued in the 1995/2008 scheme? • Benefits accrued will be “preserved” • Linked to final salary at time of leaving 2015 scheme • Can be taken at 1995/2008 scheme NPA but must retire from NHS employment • If 1995 section benefits taken cannot rejoin 2015 scheme • 2015 benefits can be taken at same time but will be actuarially reduced.

  10. “Choice” • A second “choice” exercise for members in the 95 Section of the current Scheme will take place after 1 April 2015 • Members able to revisit option to move to 2008 scheme. Those eligible: - Do not have full protection - Were eligible at last exercise • Further information will be issued in due course.

  11. Opting out of Protection • Those in 2008 section will be given a choice to opt out of protection and move direct to 2015 section • An exercise offering members this option will take place after 1 April 2015 • Further details available in due course

  12. What else will be different? • Formal Scheme Governance in place • HM Treasury will have more financial control • Pension Regulator will have oversight

  13. Scheme Regulations and Guides • SPPA aim to consult on Regulations from 1 October 2014 • Regulations to be laid in Parliament early February 2015, coming into force from 1 April 2015 • Scheme Guides - to be developed and available early 2015

  14. Where can I get further information? • SPPA website - Framework Document, FAQ, Protection Calculator and other docs to be added as developed • See www.sppa.gov.uk - Changes to the NHS (Scotland) Pension Scheme from April 2015 • email nhspensionsreform@sppa.gsi.gov.uk • Trade Unions • Professional organisations • HR Managers

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