HSC Pension Service New Scheme Members

Introductions John Coyle HSC Pension Service Pension Liaison Team Provide guidance to employers on Pension Regulations and Legislation Providing workshops & presentations to scheme members updating you on the features and benefits of the scheme.

Purpose of Today’s Event To provide a background to the HSC Pension Scheme Provide information on how the scheme works and how much it cost Provide information on the options open to you to enhance your pension benefits at retirement Provide details of the potential benefits payable to you on retirement Provide information on benefits payable to your loved ones should anything happen to you

Topics for Discussion Brief overview of the Scheme Transferring Benefits into the scheme Issues which can Impact your Pension Increasing your Benefits Benefits Payable Survivors Benefits Payable Important Forms

The HSC Pension Scheme The HSC Pension Scheme is a Defined Benefit Career Average Revalued Earnings (CARE) pension scheme which pays benefits using a defined formula based on annual pension accrued over the lifetime of scheme membership A pension is calculated on 1/54th of your annual pensionable earnings. This figure is revalued each year up to your retirement There is an option for you to exchange part of your pension to receive a tax free lump sum Normal Retirement age in the 2015 scheme is linked to your State Pension Age (SPA)

The 2015 Scheme Contribution rates vary from 5% to 14.5% of your pensionable pay The contributions you pay receive tax relief The Scheme provides survivors pension benefits which are payable to spouse, partner, dependent children The scheme provides a life insurance lump sum payable in the event of your death if still in active service You can retire and claim your scheme benefits from age 55 but a reduction factor will be applied.

Membership of the 2015 Scheme Membership of the 2015 Scheme is open to HSC employees aged over 16 and under 75 Certain restrictions apply such as: Member cannot join: If they are in receipt of 1995 scheme benefits (except tier 1 ill health retirement and the member is under 50) Member has full protection for future accrual in the 1995 scheme Member has full protection for future accrual in the 2008 scheme There is no restriction on the number of years service which can be accrued.

Pensionable Pay Tiered Contribution Rates WTE Pensionable Pay Contribution Rate Up to £15,431.99 5.0% £15,432.00 to £21,477.99 5.6% £21, 478.00 to £26,823.99 7.1% £26,824.00 to £47,845.99 9.3% £47,846.00 to £70,630.99 12.5% £70,631.00 to £111,376.99 13.5% £111,377.00 and over 14.5%

Example Cost Member earns £21,693 per annum (first point of Band 5 pay scale) Falls into the 7.1% category Amount paid = £21,693 x 7.1% = £1,540.20 per annum Actual cost to member when you take into consideration tax relief £1,540.20 x 20% = £308 £1,540.20 - £308 = £1,232.20 per annum (£102.68 per month)

Transferring In Benefits from other Schemes If you have built up Pension Benefits in another scheme you can transfer these benefits into the HSC Pension Scheme If you have service in NHS England & Wales, Scotland or Isle of Man you must transfer this service to N. Ireland. It does not move automatically If you wish to transfer benefits in from another Scheme, you must make your application within 1 year of joining the Scheme. Benefits you have built up in other schemes will be converted to a monetary value and added to the pension you build up in the HSC Pension Scheme. Further information can be found on the Scheme website at http://www.hscpensions.hscni.net/quick-links/scheme-guides/

Issues which can impact your pension Part Time Working Breaks in Service Salary Sacrifice Unpaid Leave Career Breaks

Additional Pension Purchase Members may increase their retirement package by opting to purchase additional pension benefits in blocks of £250 up to a maximum of £6,500 You can make requests for the cost of purchasing additional pension by submitting Form AP1 to HSC Pension Service HSC Pension Service will calculate and advise you of the costs (lump sum or instalments) If you opt to pay by instalments HSC Pension Service will liaise with Payroll Shared Service to set up deductions from your salary If you opt to pay by lump sum you should forward a cheque to HSC Pension Service Example cost of additional pension of £2,000 per annum for member age 25 = £110 per month for 10 years or £10,400 lump sum

Early Retirement Reduction Buy Out (ERRBO) ERRBO is a feature of the scheme which allows a member to pay additional contributions to reduce their retirement age down to 65 Maximum buy-out = 3 years of actuarial reduction Member with NRA of 68 retiring at 65 will have no reduction applied Example cost for a member age 25 who wishes to buy a 3 year ERRBO is 3.39% of their gross salary If you are interested in purchasing an ERRBO you should read the factsheet and submit the application form available on the scheme website

Benefits Payable Normal Age Retirement Pension Voluntary Early Retirement Pension Ill Health Retirement Pension Partial Retirement

How your Pension is Calculated 1/54th of your annual pensionable pay is added to your pension pot year on year This amount is revalued each year using a set increase amount The revaluation increase amount is 1.5% + CPI CPI is the Consumer Price Index which is used by HM Treasury to determine the annual inflation rate each year. All your years pension are added together to give your final overall annual pension payable

How your Pension is Calculated You should use the calculator on the scheme website to forecast how your pension can grow The calculator can be accessed at www.hscpensions.hscni.net/2015-scheme-calculators/ You must know your State Pension Age to use the calculator. Your State Pension Age can be found at www.gov.uk/state-pension-age/y

Example Calculation Member joins the scheme at age 25 Starts on first point of Band 5 pay scale (£21,693 per annum) Using the following assumptions Member works full time Member’s pay increases each year by 0.5% Rate of inflation each year is 0.5% Member works until Normal Retirement Age of 68 Pension Payable = £30,655 per annum (can opt to take a tax free lump sum)

Voluntary Early Retirement Voluntary Early Retirement (VER) is available to members who have reached their Minimum Retirement Age (MRA). MRA in the 2015 Scheme is age 55 Reduction factors are applied to the pension calculation to take account of it being in payment longer You can use the VER Calculator on the website to estimate the potential reduction in benefits.

Ill Health Retirement There are two types of Ill Health Retirement Tier 1 - where the member is found to be permanently incapable of efficiently discharging the duties of their employment Tier 2 - where the member is found to be permanently incapable of any regular employment Your HR & OHS teams will assist you in this process If a member meets the criteria for Ill Health Retirement and cannot continue in their employment they can apply to have their pension benefits paid early. Benefits will be paid before NPA without any reductions applied.

Partial Retirement Partial retirement is a feature of the 2015 schemes which allows an active member to claim a portion of their pension benefits whilst still continuing in pensionable employment Member must have reached their MPA (Age 55) Member’s Terms and Conditions must change and Pensionable Pay must be reduced to at least 90% of pensionable pay received in previous 12 months. Pensionable Pay must remain reduced for a period not less than 12 months

Survivors Benefits In the scheme you will have Life Insurance cover equal to twice the value of your annual pensionable pay You can nominate whoever you wish to be the recipient of the death gratuity payment should you pass away in active scheme membership In the event of your death, A survivors pension is payable to your spouse, civil partner or nominated partner for life (in service or on pension) If you have dependent children, a child's pension is payable for each child up to age 23

Important Literature/Forms/Calculators Scheme Guides/Transfer in guide/Scheme Factsheets Pension Calculators ERRBO/Additional Pension Purchase Factsheets Nomination Forms (DG3, PN1) Guidance Material if you were considering opting out of the Scheme You should familiarise yourself with the scheme website at www.hscpensions.hscni.net

Contact Details HSC Pension Service Waterside House 75 Duke St Derry BT47 6FP E-Mail hscpensions@hscni.net john.coyle@hscni.net Website www.hscpensions@hscni.net Tel 02871 319111