1. HSC Pension Service
2008/2015 Scheme 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
As a result of pension reform the HSC Pension Scheme changed with the introduction of the 2015 CARE Pension Scheme
Most members have or will move to the 2015 Pension Scheme
Today’s event is to provide you with information on what effects this will have on you as a scheme member
We shall discuss options available to you to increase 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
ERRBO

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

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 reckonable pensionable pay, (actual pay for part time workers)
Survivors pension payable to spouse, partner, children

7. Membership of the 2008 Scheme
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 (aged 55 at 01/04/2012)
Tapered protection is in place for those members greater than 10 but less than 13 years 5 months from their NRA
Those members born between 02/04/1957 and 31/08/60 move to the new scheme at a date after 01/04/2015 – See calculator on scheme website

8. The 2015 HSC Pension Scheme
The 2015 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 no automatic lump sum in the 2015 scheme but there is an option to exchange pension for a lump sum
Normal Retirement age in the 2015 scheme is linked to your State Pension Age (SPA)

9. 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 re-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.

10. The 2008/2015 Schemes
Benefits from both schemes will be calculated separately and added together to calculate your final overall pension
Both schemes provide survivors pension benefits which are payable to spouse, partner, dependent children
You can claim your 2008 scheme benefits before and separate to your 2015 scheme benefits but you must retire from HSC employment
If you retire and claim your 2008 benefits and return to employment in the HSC you can re-join the 2015 Scheme.
Your 2015 scheme benefits can be claimed from age 55 but a reduction factor will be applied.

11. Pensionable service for 2008 section members
Your pension benefits are calculated using a formula based on the amount of pensionable service you accrue and 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 5 year period this would mean you had reckonable pensionable service of 3 years as opposed to 5
Reduced paid sickness/maternity are still treated a full pensionable service (subject to part time contracts)

12. Factors which 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

13. 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

14. 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 Trust and the HSC Pension Scheme on 01/04/2008 and moves to the 2015 scheme on 31/03/2015
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 31/03/2015 = 7 years

15. 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
Dates
FT/PT
% Worked
Service
01/04/2008 – 31/03/2010 FT
100%
2/000
01/10/2010 – 31/03/2011 PT
50%
0/092
01/04/2012 – 31/03/2014
60%
1/073
01/04/2014 – 31/03/2015
0/183
Total Service
3/348

16. Pensionable Pay 2008 Scheme
The figure used to calculate your pension is the average of the 3 highest consecutive years in the last 10 years
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 (WTE) pensionable pay for your grade.
If a Part time member working 50% of normal hours was receiving £15,000 pay we use a figure of £30,000 as WTE
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.

17. 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

18. 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)

19. 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

20. 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

21. 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 and £6,500 for 2015 scheme).
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 £2000 per annum for Female age 40 (Ret Age 68) = £171 per month for 10 years or £16,640 lump sum

22. Early Retirement Reduction Buy Out (ERRBO)
ERRBO is a feature of the 2015 scheme which allows a member to pay additional contributions to buy out any potential actuarial reduction if retiring before NRA
Maximum buy-out = 3 years of actuarial reduction
Member with NRA of 68 retiring at 65 will have no reduction applied
If you are interested in purchasing an ERRBO you should read the factsheet and complete the expression of interest form available on the scheme website
You can use the calculator on the scheme website to calculate the potential percentage cost

23. Early Retirement Reduction Buy Out (ERRBO)
Example Cost for Scheme Member age 45 with a Normal Retirement Age of 67
1 Year ERRBO to reduce their NRA in the 2015 Scheme to Age 66
1.29% of their Gross Pensionable Pay
2 Year ERRBO to reduce their NRA in the 2015 Scheme to Age 65
2.58% of their Gross Pensionable Pay
ERRBO can only be taken to a minimum age of 65
See Calculators on the Scheme Website

24. Estimates of Benefits/Calculators
Due to the nature of the 2015 CARE Scheme, HSC Pension Service will not be able to forecast what your benefits will be on retirement.
You can visit the Calculators section of the Scheme website which has links to both a 1995 scheme calculator and a 2015 scheme calculator with predetermined factors which can show you in principle how your pension benefits could grow.
THESE FIGURES ARE FOR ILLUSTRATIVE PURPOSES ONLY

25. 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

26. When Can I Retire? 2015 Section Benefits
In the 2015 scheme your Normal Retirement (NRA) age is linked to your State Pension Age (SPA)
You can check your SPA by visiting the Government Website at
The earliest retirement age in the 2015 Section of the scheme is Age 55.
If you retire and claim your benefits before your State Pension Age then they 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

27. 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

28. Reduction Factors 2015 Section
Pension Reduction Factors
Years to Retirement 1 2 3 4 5 6
Factor
0.946
0.896
0.849
0.807
0.767
0.730
Years to Retirement 7 8 9 10 11 12
Factor
0.695
0.663
0.633
0.605
0.578
0.554

29. How does VER Affect my Benefits?
Example VER Calculation
Cathy retires at age 56 from the 2008 section of the HSC Pension Scheme and has accrued the following benefits:
Pension = £8,000 per annum
As Cathy is retiring early her 2008 scheme benefits are reduced as follows:
Pension £8,000 x = £5, per annum
Survivors benefits are not affected by these reductions

30. How does VER Affect my Benefits?
Cathy has the option to leave her 2015 scheme benefits until she reaches SPA (assumed to be age 67) or claim them at age 56 or at any date in the future.
If we assume Cathy has accrued a pension worth £10,000 in the 2015 scheme by age 56 and wishes to claim it the value of the early payment of the pension is as follows:
Pension £10,000 x = £5,780 (no automatic lump sum)
Cathy’s total VER pension benefits at age 56 are:
Total Pension = £10,876 (£5,780 + £5,096)
Cathy can give up a proportion of this pension to receive a lump sum

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

32. Partial Retirement/Drawdown
Partial retirement is a feature of the 2008 & 2015 schemes 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

33. 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

34. Partial Retirement Calculation
Member has built up pension benefits of £4,000in the 2008 scheme & £12,000 in the 2015 scheme and wishes to claim 25% 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 £40k to £32k
25% of the members total pension is £4,000 per annum which must be taken from the 2008 benefits and reduced to £3,088 (reduction factor of 0.772)
Member has the option to convert part of the £3,088 pension for a lump sum (use the on-line calculator)

35. 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

36. Partial Retirement Calculation
Member continues to build upon the remaining £12,000 which grows to £15,000 at age 64
Member opts again to partially retire by reducing their contract from 4 days to 2 days and claim another 30% of their pension. Their pay reduces from £32k to £16k
30% of the members remaining pension in the 2015 scheme is £4,500 per annum which is reduced to £3,820 (reduction factor of 0.849)
Member has the option to convert part of the £3,820 pension for a lump sum (using the on-line calculator)

37. Reduction Factors 2015 Section
Pension Reduction Factors
Years to Retirement 1 2 3 4 5 6
Factor
0.946
0.896
0.849
0.807
0.767
0.730
Years to Retirement 7 8 9 10 11 12
Factor
0.695
0.663
0.633
0.605
0.578
0.554

38. Partial Retirement Calculation
Member continues to build upon the remaining £10,500 which grows to retirement
Assuming the member did not convert part of their 2015 pension for lump sum their income for 2 days working plus partial retirement would be approx. £16,000 + £3,820 + £3,088 = £22,908
The member will be eligible for the remaining 45% of their scheme benefits at retirement.
Member has the option to convert part of their remaining 2015 scheme benefits for a higher lump sum at retirement.

39. Age/Normal Retirement
The Normal Retirement Age (NRA) for members of the 2008 section of the scheme is 65
The Normal Retirement Age (NRA) for members of the 2015 scheme is linked to your State Pension Age (SPA)
You can find out your SPA by visiting the website
As you have benefits in both the 2008 & 2015 schemes you will technically have 2 NRA’s
We will do a calculation on the benefits you have accrued in both schemes and add them together to get your overall pension

40. 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 on the service you have accrued up to the point of joining the 2015 scheme, multiplied by 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
Your pension for the 2015 scheme is the value of the pension pot, which is your pensionable pay each year from 1st April 2015 divided by 54 and revalued by CPI + 1.5%.

41. Age (Normal) Retirement
Your pension will be the value of the 2008 and 2015 scheme added together.
As you have no automatic lump sum in either scheme, 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.
You cannot convert all of your pension for a one off lump sum.

42. Age (Normal) Retirement cont.
Karen has accrued 7 years service in the 2008 section of the scheme when she moved to the 2015 scheme at 01/04/2015
Service of 7 years and a reckonable pay figure of £22,500
Pension = £2,625
Maximum Lump Sum option
Pension = £1,688
Lump Sum = £11,244

43. Age (Normal) Retirement cont.
If we assume the following we can use the 2015 scheme calculator to forecast the value of Karen’s pension in the 2015 scheme:
Karen joined the 2015 scheme at age 46
Karen has NRA of 67
Karen’s pensionable pay on joining is £20,500

44. Age (Normal) Retirement cont
In the 2015 Scheme Karen has accrued benefits of
Pension = £10,882
Karen's total benefits are as follows
Pension = £10,882 + £2,625 = £13,507
Karen has the option to give up some of her pension for a lump sum at a rate of £12 lump sum for every £1 pension

45. 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

46. 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.

47. Ill Health Retirement (Cont.)
Tier 1 benefits are based on the service you have accrued to date.
For example Jane has accrued 7 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 = £2,916

48. Ill Health Retirement (Cont.)
We then calculate the value of benefits accrued in the 2015 scheme
Assuming Jane has a initial pensionable pay figure of £24,000 increasing each year by 0.5%
Jane has accrued 5 years service in the 2015 scheme
The revaluation rate of Jane’s benefits is 2% (0.5% CPI+1.5%) per annum

49. Ill Health Retirement (Cont.)
Year
Earnings
Pension
Year 1
Year 2
Year 3
Year 4
Year 5 1
£24,000
£444.44
£453.33
£462.40
£471.65
£481.08 2
£24,120
£446.67
£455.60
£464.71
£474.01 3
£24,240
£448.90
£457.88
£467.04 4
£24,361
£451.14
£460.17 5
£24,483
£453.40
Total Pension Accrued after 5 Years £

50. Ill Health Retirement (Cont.)
Jane's total benefits for Tier 1 Ill Health Retirement will be as follows:
2008 Pension Benefits
Pension = £2,916
2015 Pension Benefits
Pension = £2,335
Total Benefits Payable
Pension = £5,251

51. 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 (SPA in the 2015 scheme).
The amount of enhancement varies depending on your age, you will receive 50% of your prospective service to your SPA
The calculation for Tier 2 Ill Health Retirement Pension is based on a formula which uses the value of your pension benefits accrued to date, the service accrued to date and 50% of your prospective pensionable service
We calculate the value of these benefits and add them to the benefits accrued under a Tier 1 pension

52. 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.

53. 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 unless otherwise requested.
If John is a full time employee with an actual annual reckonable 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 reckonable pay as John but their actual reckonable pay figure is £12,500. Their death gratuity will be £25,000 (2 x £12,500)
An adult survivors pension is payable to a spouse, civil partner or co-habiting partner at a rate of 37.5% of your 2008 scheme membership & 33.75% of your notional tier 2 ill health pension for 2015 scheme membership

54. Death Benefits cont.
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).

55. 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

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