1. HSC Pension Service
2008 Section Workshop

2. 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.

3. Purpose of Today’s Event
Today’s event is to provide you with information on the 2008 section of the scheme of which you are a member
We shall discuss options available to you regarding:
increasing your benefits,
options of when you can retire and claim your benefits and
what choices you can make when approaching retirement.

4. Topics for Discussion Brief overview of the schemes Membership
Pensionable Service
Pensionable Pay
Protection of Pensionable Pay
Additional Pension Purchase

5. Topics for Discussion cont.
When can I retire
VER Pension
Normal Age Retirement
Application Process
Ill Health Pension
Death & Survivors Benefits

6. The 2008 Section of the Scheme
The 2008 section of the HSC Pension Scheme is a Defined Benefit pension scheme which pays benefits using a defined formula based on member service and Reckonable pay.
Contribution rates vary from 5% to 14.5% depending on your pensionable pay
A pension is paid at a rate of 1/60th of your service multiplied by your reckonable pay
There is no automatic lump sum for the 2008 scheme but members can exchange a proportion of their pension to buy a tax free lump sum.,
Normal Retirement Age is 65
Death in service lump sum of twice the value of your final years pensionable pay, (actual pay for part time workers)
Survivors pension payable to spouse, partner, children

7. Membership of the 2008 Scheme
The scheme opened on 01/04/2008.
Membership ceases when you reach age 75 or have accrued 45 years membership
The 2008 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 (NRA) at 01/04/2012.
This means you had to be aged 55 at 01/04/2012

8. Pensionable Service
Your pension benefits are calculated using a formula based on the amount of pensionable service you accrue and the average of the best 3 consecutive years pensionable pay in the last 10 years
Your service is counted in the number of years and days you have actually paid contributions to the scheme
If you worked part time your service will be calculated proportionately to the hours you have worked
For example if you worked 3 days per week as opposed to 5. For each year you worked you would accrue 219 days (3/5 of a year = 219 days)
Over a 15 year period this would mean you had reckonable pensionable service of 9 years as opposed to 15
Reduced paid sickness/maternity are still treated a full pensionable service (subject to part time contracts)

9. Factors which can positively affect Pensionable Service
Additional Hours – if a part time member works hours over and above their contracted hours up to the whole time equivalent, these will be converted to days and added to the service they have accrued.
For example a member who works 3 days per week works an additional day a week for a year that person will be credited with 73 days extra service.
Annual Leave, if you are paid for annual leave owing at retirement this is treated as pensionable service and will extend your retirement date

10. Factors which negatively affect Pensionable Service
The following factors will reduce a members reckonable service:
Breaks in Service (periods where the member is not in pensionable employment) This can be as a result of the member opting out of the scheme for a period, the member may have a break between employments etc.
Unpaid Leave
This can refer to periods of unpaid sick, Authorised unpaid leave, unauthorised absence, Industrial Action
Career Breaks
If a member was on a career break and opted not to continue paying their scheme contributions they will not be credited with pensionable service for this period

11. How to Calculate 2008 Section Pensionable Service
Pensionable service is calculated over the period the member pays contributions. An ideal pension record could be as follows:
John joins the Belfast Trust and the HSC Pension Scheme on 01/04/2008 and works until retirement on 31/03/2022
John worked full time and has had no breaks in service or no unpaid leave.
John’s service is calculated as follows:
01/04/2008 to 31/03/2022 = 14 years

12. How to calculate Pensionable Service
An employee with exactly the same start and leaving dates but working part time and full-time and having breaks in service
This shows how varied working patterns can effect pensionable service

13. Pensionable Pay 2008 Scheme
The figure used to calculate your pension is the average of the 3 highest consecutive years in your last 10 years service
Leaver – on the assumption that the last 3 years are the highest, pensionable pay for these years will be added together and an average used for calculation.
If you are in part time service we use the whole time equivalent pensionable pay for your grade.
If the reckonable pay for a Part time member working 50% of normal hours was £15,000 a WTE figure of £30,000 is used to calculate your benefits
Pensionable pay is made up of all salary, wages and other regular payments but does not include bonuses, non-consolidated payments, expenses or overtime
Salary Sacrifice can affect your pensionable pay figure.

14. Example Calculation
Using the information from the previous examples we can see how part time service can affect the calculation of benefits.
If we assume John’s Pensionable pay is £30,000
Using the online calculator, Johns Pension would be calculated as follows:
14 years/60 x £30,000 = Pension
Pension = £7,000

15. Concurrent Service
Concurrent Pensionable Service can be built up by a member who is in pensionable employment in 2 or more HSC posts.
A member working in 2 or more concurrent part time pensionable posts can build up scheme membership equivalent to that if they were in 1 full time post.
Service over and above the Whole Time Equivalent is disregarded for the calculation of benefits.
Pensionable pay received in each post is taken into consideration when calculating reckonable pay for 2008 scheme benefits and annual pensionable pay for 2015 scheme benefits

16. Concurrent Service (calc.)
Member works hours per week as a band 5 and hours per week as a band 7 up until retirement.
The member is top of the scale in both posts.
This member will build 1 years pensionable service annually.
In order to calculate their reckonable pensionable pay we must take into consideration pay in both posts.
Band 5 Rate of pay = £28,180 (WTE)
Band 7 Rate of pay = £40,963 (WTE)
Actual Pensionable pay figure to be used in calculation of 2008 scheme benefits = (£28,180 + £40,963) / 2 = £34, (assuming these rates of pay were standard for 3 consecutive years)

17. Protection of Pensionable Pay
Protection through no fault of the member’s.
Member must have at least 2 years qualifying service
Through no fault of the member – Acceptable Reasons
A change in the nature of the duties performed, for example due to ill
health
A move to a lower paid post because of pending or actual
redundancy.
Being transferred to other employment with an employer.
Downgrading of Pay through AFC/RPA

18. Protection of Pensionable Pay
Request should be made within 3 months of reduction to pay
Members should apply using forms PROPAY1
Employer should complete PROPAY2
If protection of pay is applicable HSC pension service will calculate your benefits accrued to the date of reduction at the higher rate of pay

19. 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 £5,000 for 2008 section).
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 £1000 per annum for Female age 59 = £291 per month for 5 years or £14,960 lump sum

20. Estimates of Benefits/Calculators
The Scheme website offers a range of calculators to help you estimate the value of your pension benefits at retirement.
The calculators can be used to forecast:
1. The value of your pension at your NRA
2. The value of your pension if you retire before your NRA
3. The amount of Tax free lump sum you can have if you decide to commute a proportion of your pension
You can visit the Calculators section of the Scheme website to forecast your potential benefits.

21. When Can I Retire? 2008 Section Benefits
The earliest retirement age in the 2008 Section of the scheme is Age 55.
If you retire before your Normal Pension Age (NPA) of 65 then your benefits will be reduced
The reduction factor which will be applied to your pension is dependant on the number of years & months to your NPA.
The reduction factor is applied as your benefits will be in payment longer than if you were to retire at your NPA

22. 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

23. How does VER Affect my Benefits?
Example VER Calculation: -
Cathy retires at age 58 from the HSC Pension Scheme and has accrued the following benefits:
Pension = £8,000 per annum.
There is no mandatory lump sum in the 2008 Section but you can convert £1 of your pension in exchange for £12 lump sum.
As Cathy is retiring early her benefits are reduced as follows:
Pension £8,000 x = £5, per annum
Survivors benefits are not affected by these reductions

24. Other Scheme Benefits Payable
Partial Retirement
Normal Age Retirement
Ill Health Retirement
Death in Service / Survivors Benefits

25. Partial retirement
The 2008 scheme first introduced this facility which is intended to support a phased withdrawal from the workplace with a reduction in employment commitments supplemented by partial payment of pension.
The concept of partial retirement is where an active member claims a portion of accrued benefits whilst still continuing in pensionable employment. The member is required to have a change to the terms & conditions of the continuing employment and a reduction in pensionable earnings.
Agreement with your employer must be sought

26. Partial Retirement/Drawdown
Partial retirement is a feature of the 2008 scheme where an active member claims a portion of accrued 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

27. Partial Retirement/Drawdown
If a members pay rises above the reduced amount in the 12 months following the beginning of partial retirement the pension in payment will be abated to zero.
Member must take at least 20% of their pension benefits and not more than 80% (pension will be reduced as paid before NRA)
Member can continue to accrue pension in the remaining proportion of benefits in the scheme
Member can only invoke this option twice

28. Partial Retirement Calculation
Member has built up pension benefits in the 2015 scheme valued at £6,000 and wishes to claim 40% of their pension benefits accrued at age 60.
Member opts to partially retire by reducing their contract from 5 days to 4 days. Their pay reduces from £30k to £24k
40% of the members pension in the 2015 scheme is £2,400 per annum which must be reduced to £1,852 (reduction factor of 0.772)
Member has the option to convert part of the £1,852 pension for a lump sum (use the on-line calculator)

29. Partial Retirement Calculation
Member continues to build upon the remaining £3,600 which grows to £6,000 at age 64
Member opts again to partially retire by reducing their contract from 4 days to 2 days and claim another 40% of their pension. Their pay reduces from £24k to £12k
40% of the members remaining pension in the 2008 scheme is £2,400 per annum which is reduced to £2,277 (reduction factor of 0.949)
Member has the option to convert part of the £2,277 pension for a lump sum (using the on-line calculator)

30. 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

31. Partial Retirement Calculation
Member continues to build upon the remaining £3,600 which grows to retirement
Assuming the member did not convert part of their 2008 pension for lump sum their income for 2 days working plus partial retirement would be approx. £12,000 + £1,852+ £2,277 = £16,129
The member will still be eligible for the remaining element of their 2008 scheme.
Member has the option to convert part of their remaining 2008 scheme pension for a lump sum.

32. Age (Normal) Retirement
When you reach Normal Retirement Age (NRA) you can apply for your Pension Benefits.
Your benefits for the 2008 section are calculated using the service you have accrued up to retirement, and the average of your best 3 consecutive years pensionable pay in the last 10 years of scheme membership.
The following formula is used in the calculation:
Service/60 x Reckonable Pay = pension

33. Age (Normal) Retirement
As there is no automatic lump sum in the 2008 section, you have the option to convert part of your pension to take a lump sum at a rate of £12 lump sum for every £1 of pension given up.
A calculator is available on the scheme website to show you how this can affect your annual pension amount
You cannot convert all of your pension for a one off lump sum.

34. Age (Normal) Retirement cont.
Karen has accrued 17 years service in the 2008 section of the scheme at retirement
Karen had a reckonable pay figure of £20,000
Using the online calculator we can establish that Karen’s pension is
Pension = £5,666
Using the online Maximum Lump Sum calculator Karen's benefits could be converted to:
Pension = £3,643
Lump Sum = £24,276

35. Pension Application Process
If you are thinking of retiring through Normal Age Retirement or VER you should meet with your Manager as soon as possible. (usually 4 months in advance of your proposed date)
You may wish to visit the scheme website and use the calculator to estimate the value of your benefits
When completing the AW6 you should pay particular attention to Part 6, the section which asks if you wish to take a lump sum.
At this point you should make a decision based on you own circumstances. (refer to the calculator on the website)
HSC Pension Service will not advise you which option to choose, you may wish to speak to a financial advisor
Please submit you birth certificate with the application form to speed up the process

36. 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
If a member feels they meet the criteria for Ill Health Retirement and cannot continue in their employment, they can apply to have their pension benefits paid early.
Your HR & OHS teams will assist you in this process
If found to be medically unfit your benefits will be paid before NRA without any reductions applied.

37. Ill Health Retirement (Cont.)
Tier 1 benefits are based on the service you have accrued to date.
For example Jane has accrued 12 years membership in the 2008 section of the scheme when she applied for and was accepted for Tier 1 Ill Health Retirement.
Jane's benefits will be calculated using this amount of pensionable service and her reckonable pay figure
If we assume Jane's reckonable pay figure is £25,000 we can use the calculator on the scheme website to work out Jane’s benefits
Pension = £5,000

38. Ill Health Retirement (Cont.)
Jane will have the option to commute some of her pension for a one off tax free lump sum
Assuming Jane wants a lump sum of £12,000 we can use the online calculator to ascertain how this will affect her pension.
Jane’s benefits are now as follows
Pension = £4,000
Lump Sum = £12,000

39. Ill Health Retirement (Cont.)
Tier 2 benefits are based on the service you have accrued to date plus a possible enhancement of service up to your normal retirement age (age 65 in the 2008 section).
The amount of enhancement varies depending on your age, you will receive 2/3rds of your prospective service to your NPA
The calculation for the enhanced element of the Tier 2 Ill Health Retirement Pension is based on a same formula used to calculate the value of your pension benefits accrued to date
We calculate the value of these benefits and add them to the benefits accrued under a Tier 1 pension to pay a combined pension

40. Ill Health Retirement (Cont.)
If a member has a terminal illness and is awarded Tier 2 Ill Health Retirement and is found to have a life expectancy of less than one year they will have the option to commute their benefits to a one off lump sum.
This is calculated using the Tier 2 formula, giving the member the maximum lump sum payable by commuting a proportion of their pension at a rate of £12 lump sum for every £1 pension exchanged up to HMRC maximum limit.
The remaining pension is then multiplied by 5 and converted to a one off lump sum payment.

41. Death Benefits
If a member dies in service a death gratuity is payable equal to twice the members actual annual pensionable pay. This benefit is paid to the member’s spouse or estate (for unmarried/civil partnership members) unless otherwise requested (DG3 form).
If Tom is a full time employee with an actual annual pensionable pay figure of £25,000 and dies in service then the death gratuity payable is £50,000
If a part time member working 50% of their normal hours is on the same pensionable pay scale as John but their actual pensionable pay figure is £12,500. Their death gratuity will be £25,000 (2 x £12,500)

42. Death Benefits cont.
An adult survivors pension is payable to a spouse, civil partner or co-habiting partner at a rate of 37.5% of your notional tier 2 ill health pension for 2015 scheme membership
If there are any dependent children a surviving children's pension is also payable.
The rate of Childs pension will be determined by the number of dependent children
A dependent child is deemed to be aged under 23 (or aged 23 or over and incapable of earning a living due to permanent physical or mental infirmity which he/she was suffering at the time the member died).

43. Death Benefit Nomination Forms
A member can nominate anyone to receive the death gratuity in the event of their passing.
This is done by completing the form DG3 available from the scheme forms section of the website and submitting it to HSC Pension Service
Form PN1 can be used if you wish to nominate your partner to receive a survivors pension in the event of your death. Certain criteria must be met such as:
you and your partner have been living together in an exclusive long-term relationship for at least 2 years;
you and your partner are free to marry or to enter a civil partnership
you and your partner are financially interdependent i.e. you rely on your joint finances to support your standard of living, although you do not need to be contributing equally

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