1. The NHS Pension Scheme (England & Wales)
Alan Fox
National Pensions Officer
UNISON

2. Its an unfunded scheme just like the state pension

3. Cash rich or cash poor?

4. Membership breakdown and average pension figures
The average pension in payment is £7,675 per year
The average pension accrued by an active member is £5,586 per year
Source: 2012 valuation report published June 2014

5. Scheme composition

6. The three schemes – 1995, 2008 and 2015 1995 Scheme
Scheme in operation before 1 April Final salary scheme with 1/80th pension build up rate and tax-free cash sum in addition of three times pension value. Normal Pension Age of 60. Maximum of 45 years membership
2008 Scheme
Scheme for new entrants from 1 April 2008 to 31 March Final salary scheme with 1/60th pension build up rate and can convert pension for tax-free cash up to 25% maximum limit. Normal Pension Age of 65 and maximum of 45 years membership
2015 Scheme
The current scheme for new starters. A Career Average Revalued Earnings (CARE) scheme with a 1/54th pension build up rate. Each years pension earned increases every year up to retirement by inflation plus 1.5%. Normal Pension Age equivalent to individual State Pension Age. No membership limit

7. What scheme are you in?
You would have moved to the 2015 Scheme from the 1 April 2015 unless you:
Were in the 1995 Scheme at the 1 April 2012 and were aged 50 or over
Were in the 1995 Scheme with Mental Health Officer or Special Class status at the 1 April 2012 and were aged 45 or over
Were in the 2008 Scheme aged 55 or over at the 1 April 2012
If you satisfy any of the above you remain in the 1995 or 2008 Scheme until your retirement. You do not move to the 2015 Scheme
If you just missed out on this you are likely to have Tapering Protection which means you can stay in the 1995 or 2008 Scheme for longer but would move to the 2015 Scheme at some point
Tapered Protection:
If you were more than 10 years but less than 13 years 5 months from your NPA as at 1 April 2012 you are entitled to Tapered Protection. This means you will move to the new 2015 scheme at a date later than the 1 April See for the exact date
No Protection:
If you are a member of the 1995 or 2008 Section and were, at the 1 April 2012, more than 13 years 5 months away from your NPA you will move to the new 2015 Scheme on the 1 April 2015

8. 2015 scheme example
Based on Sheila who has full-time earnings of £18,000
Year 1
Year 2
Year 3
Year 4
Year 1 Pension
£333
£345*
£357*
£369*
Year 2 Pension
N/A
£345
Year 3 Pension
Year 4 Pension
N/a
Total Pension
£678
£1,035
£1,404
* Re-valued at 3.5% assuming 2% CPI plus 1.5%

9. Contribution rates for 2015-2019
Tier
FTE Earnings Band
Gross Contribution Rate 1
Up to £15,432 5% 2
£15,432 -£21,477.99
5.6% 3
£21,478 -£26,823.99
7.1% 4
£26, ,845.99
9.3% 5
£47,846 - £70,630.99
12.5% 6
£70,631 - £111,376.99
13.5% 7
£111,377 +
14.5%
Employer contribution rate is 14.38%

10. Net contribution rates for 2015-2019
FTE Pensionable Pay
Net Contribution Rate
£10,000 4%
£15,000
£20,000
4.48%
£25,000
5.68%
£30,000
7.44%
£40,000
£60,000
7.5%
£80,000
8.10%
£130,000
8.70%

11. Retirement ages
Your Normal Pension Age in the 2015 Scheme is your State Pension Age
Your Normal Pension Age is the age you can draw your pension without any reduction for early payment applying
This will be 66 from October 2020, 67 from 2028 and 68 from 2046
You can check your State Pension Age at
You can retire from age 55 but your pension will be reduced in doing so

12. Transition members
Former 1995 and 2008 scheme members still retain a pension age of 60 or 65 on this service
Likewise Special Class and MHO members still retain a pension age of 55 on their 1995 scheme service
Former members of the 1995 scheme can retire and draw their pension without having to draw their 2015 scheme pension
Any member who draws their 1995 scheme pension cannot re-join the NHS Pension Scheme
2008 and 2015 scheme members have the option of Drawdown
A final salary link still applies to 1995 and 2008 scheme pensions

13. Early retirement reductions
Your pension is reduced if you draw it before your Normal Pension Age (NPA). The % reductions for the 2015 Scheme are as follows:
The 1995 Section factors in contrast are as follows:
Years Early 1 2 3 4 5 6 7 8 9 10 11 12
Reduction (%) 16 20 24 27 31 34 37 40 43 45
Years Early 1 2 3 4 5 6 7 8 9 10
% Reduction to pension 14 18 21 25 28 31 34 37
% Reduction to Tax-free cash 12 15 17 20 22 27

14. Tax-free cash
You are entitled to draw a tax-free cash sum from the NHS Pension Scheme in addition to an annual pension
The annual pension is taxable (if you exceed the Personal Allowance) which is currently £11,500
1995 Scheme members receive a tax-free cash sum of 3 times their annual pension value, and can elect to receive more Scheme and 2015 Scheme members can receive a tax-free cash sum by exchanging some of their pension
The cash for pension conversion rate is 12:1 meaning that you lose £1 of pension for each £12 of tax-free cash claimed
You can see the maximum amount of tax-free cash you can claim on your Annual Benefit Statement

15. Commuting pension for cash
To work out the maximum tax-free cash sum you can claim you multiply your annual pension by 20, add any automatic tax-free cash sum, and then your maximum lump sum is 25% of this value
So for example if you are a member of the 1995 Scheme with a pension of £10,000 a year and an automatic tax-free cash sum of £30,000 the maximum amount of tax-free cash you can take is £57,500
You then take any automatic sum away from your maximum entitlement and divide by 12 to see what your reduced pension would be
In the above example, if you took £57,500 tax-free cash your pension would reduce from £10,000 a year to £7,708 per year

16. Ill-health early retirement
If your employment is terminated through ill-health you may qualify for an ill-health early retirement pension
A Tier 1 pension would apply if the medical evidence suggests you are permanently incapable of undertaking the duties of your job role. This is simply payment of the pension you have earned to date
A Tier 2 pension is the higher award as it also gives a 50% service enhancement to your Normal Pension Age (2/3rds for 1995 Section members). You also have to show that you are permanently incapable of undertaking regular employment however
Applications are made through your employer – AW33E Form

17. Redundancy
If you leave employment by reason of redundancy you can claim your pension if 55 or over (possibly 50 for 1995 scheme members)
Your pension will however be reduced for being paid early unless you use some or all of your severance payment to buy-out the reduction
It’s possible that your severance payment may not be enough to buy out the reduction in full in which case you accept this or use other savings to buy-out fully
Alternatively you can just elect for the maximum severance payment and claim a reduced pension or simply leave drawing your pension until your Normal Pension Age so no reduction applies
Interests of Efficiency - No reduction applies if you leave employment in the interests of service efficiency (although you don’t get a severance payment)

18. If you die is anything paid out?
Survivors pension if at least 2 years membership
Lump sum payment of twice pay
A short-term pension is payable for 6 months equivalent to rate of pay
This will be paid automatically to your spouse/civil partner unless you elect otherwise – DB2 Form
If living with a partner – need to complete a PN1 Form

19. Can you buy extra pension?
Additional Pension
AVC’s
ERRBO
What is it?
Fixed annual pension
Pot of money
Can draw pension early with no reduction
Cost?
Factors supplied by scheme actuary
Up to you
Depends on age and years want to buy-out
Lump sum or regular payment?
Both
Regular only
Reduced if paid before NPA?
Yes – reduced in same way as pension No
You retain the value of what bought
Can employer pay?
Yes – only by lump sum
Yes

20. What happens if your pay reduces?
Any pension you have built up in the 1995 or 2008 Scheme will still be linked to your Final Pay at retirement
If your pay band reduces through no fault of your own you can make a “pay protection through no fault of your own” claim via completion of an “SM R9 App” form. This needs to be made within 3 months of your pay reducing.
If your pay band reduces because you step down to a less demanding job role you can make a Voluntary Protection of Pay claim via completion of the same form. This election needs to be made within months of your pay reducing and your pay must reduce by at least 10%.
An SM R9 App Form must be returned to your employer.
Both of the above protections apply to 1995 Scheme members but Voluntary Protection of Pay does not apply to 2008 Scheme members

21. Pension Statements
All NHS staff are now entitled to a Total Reward Statement (TRS) which includes an Annual Benefit Statement (ABS)
Your TRS will provide personalised information about the value of your employment package and includes details of your remuneration and benefits provided locally by your employer
Your ABS will show the current value of your pension and allows you to keep track of where you are at
You can view your Statement via your Electronic Staff Record or by registering on the Government Gateway at
Also don’t forget to add your State Pension! The new State Pension is currently £ a week

22. What happens if your employment is transferred?
If you are TUPE transferred to a private contractor then under New Fair Deal you should be entitled to remain in the NHS Pension Scheme
Your new employer would be required to seek a Direction Order via application to the NHS Business Services Authority to admit transferring employees to the NHS Pension Scheme
Contracting authorities should ensure their tendering documentation makes clear reference to this provision
Directions should usually take 3 months to be granted

23. The retirement process
You should give your employer at least 4 months notice of your wish to retire
They will provide you with an AW8 Form that you should complete and return to them at least 3 months before your retirement date
Your employer completes parts 1-6 and is responsible for sending this to NHS Pensions
You will start to receive monthly pension payments 1 month in arrears from your actual retirement date
Any tax-free cash sum due should be paid on your retirement date

24. Further Info/Contacts
The NHS Pension Scheme website –
1995 and 2008 scheme guides
2015 scheme guide
Early retirement reduction factors
All relevant forms
Calculators (i.e. Early retirement, Additional Pension)
Knowledge Base
NHSPS contact details:
Address: NHS Pensions, PO Box 2269, Bolton, BL6 9JS
Telephone:
Complaints:
NHS Total Reward Statements -

25. UNISON’s Pensions Unit
UNISON has a Pensions Unit dedicated to dealing with issues concerning our member’s pension schemes and rights
We have 2 full-time pension officers plus secretarial support
We’ll always do what we can to accommodate requests for presentations and pension surgeries but obviously our resources are somewhat limited
We also deal with pensions casework and are more than happy to advise/assist in any way we can
All cases should be referred to us via the appropriate area/regional officer with a fully completed CASE Form and all relevant paperwork
Alan Fox leads on NHS Pensions for UNISON and can be contacted via Branches

26. Questions?