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 1/54 th 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 (1/54 th 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 1/54 th = £500 Total pension pot for year 1 = £500 Year 2 Member earns £27,000 1/54 th = £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 1/54 th = £ add to years 1+2 total £1025 (uprated by CPI + 1.5% (CPI for this year is 3%) i.e. 4.5% = (£ £46.13 = £ ) Total pension pot for year 3 is £ £ = £ 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 - Changes to the NHS (Scotland) Pension Scheme from April 2015See to the NHS (Scotland) Pension Scheme from April Trade Unions Professional organisations HR Managers