1. HSC Pension Service
Choice 2 Workshop

2. Topics for Discussion Choice Exercise Overview
Reasons for the Choice 2 Exercise (Pension Reform)
Eligibility for Choice 2
Features of the 1995 Scheme
Features of the 2008 Scheme
How your benefits are calculated 1995/2008 Sections
Impact of retiring early
Impact of moving your benefits
FAQs
What to do next
Contact Details

3. Choice Exercise Overview
Following the introduction of the 2008 section of the HSC Pension Scheme, members of the 1995 section were offered the opportunity to transfer their accrued benefits to the 2008 section
Members who transferred those benefits to the 2008 scheme were afforded a higher accrual rate of 60ths in the building up of their pension benefits
This exercise was known as Choice and took place in October 2009.

4. Choice Exercise Overview
Further to the impact of Pension Reform and particularly the increase in retirement age to be in line with State Pension Age, this choice is again being offered to those active members who meet the eligibility criteria
Letters have been issued to the affected members recently
It is estimated that 1 in 3 scheme members are affected by the Choice Exercise
Members who wish to transfer their benefits to the 2008 section of the scheme must submit their declaration by 12 noon 20th January 2017 to HSC Pension Service (either by post or )

5. Choice 2 Eligibility
Members of the 1995 Section of the HSC Pension Scheme (HSCPS) who;
Were in active scheme membership at 31/03/2015 and
Who originally declined the choice to move their scheme membership to the 2008 Section and
Have moved or will move to the new 2015 CARE scheme (i.e. they do not have full protection, a member can check their date of moving by accessing the calculator on the HSC Pension Scheme website)

6. Features of the 1995 Section
The scheme closed on 01/04/2015 unless you qualify through the protection arrangements
For full protection you had to be within 10 years of your normal retirement age at 01/04/2012.
This means you had to be aged 50 at 01/04/2012 (or age 45 if you were a special class nurse)
Membership ceases when you reach age 75 or have accrued 45 years membership

7. Features of the 1995 Section
Normal Pension Age (NPA) in the 1995 Section of the scheme is 60 years (age 55 if you hold Special Class Status)
Benefits accrual rate is 1/80th of pensionable service
Pension is calculated on Service/80 multiplied by your Final Pensionable Pay ( whole time equivalent).
Automatic tax free Lump Sum (within HMRC limits) is equal to 3 times the value of your pension
Final Pensionable Pay is based on the best of your last 3 years pensionable pay running back from the date of your retirement

8. Features of the 1995 Section
Minimum pension age in the 1995 section of the scheme is age 50 (if in pensionable service before 06/04/2006, otherwise age 55).
If you retire and claim your accrued benefits before NPA they will be reduced to take into account they are in payment longer.
Survivors benefits are payable in the 1995 section

9. Features of the 2008 Section
The scheme ran from 01/04/2008 to 31/03/2015 unless you qualify through the protection arrangements
For full protection you had to be within 10 years of your normal retirement age at 01/04/2012.
This means you had to be aged 55 at 01/04/2012
Membership ceases when you reach age 75 or have accrued 45 years membership

10. Features of the 2008 Section
Normal Pension Age in the 2008 Section of the scheme is 65 years
Benefits accrual rate is 1/60th of pensionable service
Pension is calculated on Service/60 multiplied by your Reckonable Pensionable Pay ( whole time equivalent).
Reckonable Pensionable Pay is based on an average of the best 3 consecutive years pensionable pay within the last 10 years
No automatic lump sum (unless you opt into the 2008 Section by Choice, this will equate to the lump sum you built up in the 1995 section up to 31/03/2008)

11. Features of the 2008 Section
Minimum pension age in the 2008 section of the scheme is age 55.
If you retire and claim your accrued benefits before NPA they will be reduced to take into account they are in payment longer.
Partial Retirement facility is available in the 2008 section
Survivors benefits are payable in the 2008 section

12. Example Calculation Jim moving to the 2008 Section
If we assume a member (Jim) chooses to move to the 2008 section on 01/04/2008, we must calculate Jim’s benefits which he accrued in the 1995 section at 31/03/2008 as follows:
Jim has accrued 20 years pensionable membership up to 31/03/2008
and has a pensionable pay figure of £40,000
20/80 x £40,000 = pension
Pension x 3 = Lump Sum
1995 Benefits as at 31/03/2008
Pension = £10,000
Lump Sum = £30,000

13. Example Calculation Jim moving to the 2008 Section
As Jim opted to move to the 2008 section we would recalculate Jim’s previous 1995 section benefits as follows.
20/60 x £39,000 (Reckonable Pay) = Pension
Pension = £13,000
As Jim is entitled to a mandatory protected lump sum of £30,000 accrued up to 31/03/2008 we must reduce Jim’s 2008 section pension accordingly

14. Example Calculation Jim moving to the 2008 Section
Jim’s pension in the 2008 scheme is £13,000
To calculate the reduction in pension to accommodate the mandatory lump sum we use a formula of giving up £1 pension for every £12 lump sum:
Mandatory Lump Sum = £30,000
£30,000/12 = £2,500 pension to be converted to lump sum

15. Example Calculation Jim moving to the 2008 Section
Jim’s actual 2008 pension benefits are now reduced as follows:
Pension (£13,000 - £2,500) = £10,500
Mandatory Lump Sum £30,000
This relates to all service Jim has accrued up to 31/03/2008 (20 years)

16. Example Calculation Jim moving to the 2008 Section
Comparison of Jim’s Benefits at 31/03/2008 You can see that Jim’s pension is higher in the 2008 section as the accrual rate of 60ths provides greater benefits than in the 80ths used in the 1995 section.
Benefit
1995 Section
2008Section
Pension
£10,000
£10,500
Lump Sum
£30,000

17. Example Calculation if Jim Remained in the 1995 Section
In comparison if we assume Jim remained in the 1995 scheme and transferred to the 2015 scheme on 01/04/2015 and using a Final Pensionable Pay figure of £40,000 Jim’s total 1995 benefits accrued would be calculated as follows:
1995 Section Pension = 27/80 x £40,000
Lump Sum = Pension x 3
Pension = £13,500
Lump Sum = £40,500

18. Example Calculation Jim moving to the 2008 Section
If we assume that Jim having opted to move to the 2008 scheme at 01/04/2008 he will accrue a further 7 years in the 2008 scheme until he moves to the 2015 scheme. Assuming Jim’s reckonable pay figure is £39,000 Jim would accrue 2008 section benefits as follows.
Pension = 27/60 x £39,000 = £17,550
Total Benefits are
Pension = (£17,550 - £2,500) = £15,050
Lump Sum = £30,000

19. Example Calculation Jim moving to the 2008 Section
Jim’s Revised Benefits based on 27 years service You can see that Jim’s pension is higher in the 2008 section but his lump sum is lower as it is only uses the 20 years service accrued up to 31/03/2008
Benefits
1995 Section
2008 Section
Pension
£13,500
£15,050
Lump Sum
£40,500
£30,000
Payable
Age 60
Age 65

20. Example Calculation 1995 member moving to 2008 Section
To receive the same lump sum of £40,500 payable in the 1995 scheme Jim would have to give up £875 pension, (£10,500/12 = £875)
Equal Lump Sums Comparison
Benefits
1995 Scheme (payable at age 60)
2008 Scheme (payable at age 65)
Pension
£13,500
£14,175
Lump Sum
£40,500
Payable at
Age 60
Age 65

21. Choice 2 Exercise Example Cases
Member D.O.B 01/10/1962 with Tapered Protection up to 01/02/ years service at 01/04/2015
Member D.O.B 01/04/1968 with no Protection, Moves to new scheme on 01/04/ years service at 01/04/2015
Member D.O.B 01/04/1972 with no Protection, Moves to new scheme on 01/04/ years service at 01/04/2015
Member D.O.B 01/10/1982 with no Protection. Moves to new scheme on 01/04/ years service at 01/04/2015

22. Choice 2 Exercise
Comparison of Example Cases at 3 Retirement Dates using the calculator
Example Case
Retirement Age 60
Retirement Age 63 & 8 Months
Retirement Age 65
1. 01/10/1962, Service 36 years
1995 Scheme is better
Both schemes are approx. equal
2008 Scheme is better
2. 01/04/1968
Service 26 Years
3. 01/04/1972
Service 20 years
4. 01/10/1982
Service 10 years

23. Voluntary Early Retirement
Voluntary Early Retirement (VER) is available to members who have reached their Minimum Retirement Age (MRA).
MRA in the 1995 Scheme is age 50 (if in pensionable service before 06/04/2006, otherwise age 55) and age 55 in the 2008 scheme
Reduction factors are applied to the benefit calculation to take account of it being in payment longer
Reduction factors are applied to both the pension and the lump sum

24. 1995 Reduction Factors Pension Reduction Factors
Age 50 51 52 53 54 55 56 57 58 59
Factor
0.639
0.665
0.692
0.722
0.754
0.790
0.827
0.867
0.909
0.954
Lump Sum Reduction Factors
Age 50 51 52 53 54 55 56 57 58 59
Factor
0.734
0.757
0.780
0.805
0.830
0.856
0.883
0.911
0.940
0.970

25. Reduction Factors 2008 Section
Pension Reduction Factors
Age 55 56 57 58 59 60 61 62 63 64
Factor
0.609
0.637
0.668
0.701
0.735
0.772
0.812
0.855
0.900
0.949

26. How does VER Affect my Benefits?
Example VER Calculation (1995 Benefits)
Jim retires at age 59 from the HSC Pension Scheme and has accrued the following 1995 section benefits:
Pension = £13,500 per annum & Lump Sum = £40,500
As Jim is retiring early his benefits are reduced as follows:
Pension £13,500 x = £12,879 per annum
Lump Sum £40,500 x 0.97 = £39,285
Survivors benefits are not affected by these reductions

27. How does VER Affect my Benefits?
Example VER Calculation (2008 Benefits)
Jim retires at age 59 from the HSC Pension Scheme and has accrued the following 2008 section benefits payable at age 65:
Pension of £17,550 of which a proportion must be given up to fund a Mandatory Lump Sum.
As Jim is retiring early his 2008 pension is reduced as follows:
Pension =£17,550 x = £12,899 per annum
Lump Sum = £30,000 x 0.97 = £29,100
Survivors benefits are not affected by these reductions

28. How does VER Affect my Benefits?
As Jim is entitled to a mandatory lump sum for his service up to 31/03/2008 his 2008 section pension must be reduced to cover the payment of the lump sum.
Mandatory Lump Sum cost = £29,100 / 12 = £2,425
Pension = £12,899 - £2,425 = £10,474 per Annum
Lump Sum = £29,100

29. Comparison of Benefits on Early Retirement
Jim’s Benefits should he retire and claim them at age 59 would be as follows:
You may wish to use the calculators available on the scheme website which may help with your decision
Benefit
1995 Scheme
2008 Scheme
Pension
£12,879
£10,474
Lump Sum
£39,285
£29,100

30. Comparison of Benefits on Early Retirement
Should Jim wish to receive the same lump sum at age 59 his benefits would be as follows:
You may wish to use the calculators available on the scheme website which may help with your decision
Benefit
1995 Scheme
2008 Scheme
Pension
£12,879
£9,625
Lump Sum
£39,285

31. Comparison of Benefits at Age 65
Jim’s Benefits should he retire and claim them at age 65 would be as follows:
You may wish to use the calculators available on the scheme website which may help with your decision
Benefit
1995 Scheme
2008 Scheme
Pension
£13,500
£15,050
Lump Sum
£40,500
£30,000

32. Comparison of Benefits at Age 65
Should Jim wish to receive the same lump sum at age 65 his benefits would be as follows:
You may wish to use the calculators available on the scheme website which may help with your decision
Benefit
1995 Scheme
2008 Scheme
Pension
£13,500
£14,175
Lump Sum
£40,500

33. Impact of moving your benefits
Benefits you move to the 2008 section of the scheme will be subject to the 2008 regulations.
Your NPA for 2008 scheme benefits is Age 65
If you hold tapered protection in the 1995 section this will be lost if you move to the 2008 section.
If you hold MHO or SCN status this will be lost if you move to the 2008 section.
Once you have made your decision it cannot be reversed
Depending on what age you retire will determine which section of the scheme is more beneficial to you.

34. Frequently Asked Questions
If I move to the 2008 section will this mean I don’t move to the 2015 scheme?
No. You have been or will be compulsorily moved to the 2015 scheme already. Choice 2 relates only to benefits accrued up to the day before you moved to the 2015 scheme.
Can I opt to move back to the 1995 section later if I change my mind?
No. Your decision cannot be reversed.
Will my Choice impact my 2015 Scheme Benefits?
No, your 2015 benefits are calculated separately and governed by a different set of regulations

35. Frequently Asked Questions
Can I contact HSC Pension Service for advice on my Choice 2?
No. HSC Pension Service cannot provide financial advice to scheme members, only factual information can be provided. Please read the literature on the Scheme Website,
My Pay and Service differ from the examples, can I substitute my own figures?
Broadly speaking – Yes, but be as accurate as possible with your details
I am buying added years in the 1995 Section can I continue to buy them if I move to the 2008 Section?
No, added years are only applicable to the 1995 Section. Any added years you have bought or are buying will be moved across to the 2008 Section as a membership credit and your contract will stop.

36. Frequently Asked Questions
Would I pay more contributions in the 2008 Section? No, contributions are the same in all the HSC Pension Schemes and are based on the amount of pay you earn. Can I take my HMRC transitional protection with me if I move to the 2008 Section? Yes. Moving from the 1995 Section to the 2008 Section of the HSC Pension Scheme does not cause the loss of protection from HMRC. However, the higher build up rate could cause the loss of either Enhanced Protection (usually at retirement) or Fixed Protection when you test for Benefit Accrual

37. Frequently Asked Questions
Can I still retire at 60 if I move to the 2008 Section?
Yes, however your pension will be Actuarially Reduced to take account of you receiving it early.
Where can I find out more information on Choice 2
HSC Pension Service has a dedicated section on their website which provides further examples and access to factsheets, calculators and decision flowcharts relating to Choice 2
How can I find out about more information about my entire HSC Pension Benefits.
Visit the HSC Pension Service website HSC Pension Service are also running information workshops. Contact your employer for more information on sessions arranged for your organisation.

38. What to do Next
If you are considering moving your 1995 section pension benefits to the 2008 section use the information on the scheme website to help make your choice.
Use the online calculators to help show you how your benefits can be affected.
Make the Choice you feel is right for you.

39. What to do Next
If you are choosing to move your accrued 1995 section benefits to the 2008 section of the scheme, please return your option notice to HSC Pension Service before 12 noon on 20th January (You can return your option by post or electronically to )
If you are not choosing to move your accrued 1995 section benefits to the 2008 section of the scheme, no response is required. Your benefits will remain in place until retirement

40. Contact Details
HSC Pension Service Waterside House 75 Duke St Derry BT47 6FP Website Tel