Transcript Document

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 – 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)
Why is this happening?
• Hutton Report 2011
• The Public Services Pensions Act
2013
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”
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.
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
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
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
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.
“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.
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
What else will be different?
• Formal Scheme Governance in place
• HM Treasury will have more financial
control
• Pension Regulator will have oversight
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
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 [email protected]
• Trade Unions
• Professional organisations
• HR Managers