1. HSC Pension Service
1995/2015 Scheme Workshop

2. Introductions
John Coyle
HSC Pension Service

3. Topics for Discussion Brief overview of the schemes Membership
Pensionable Service
Pensionable Pay
Protection of Pensionable Pay
Additional Pension Purchase/ERRBO
De-Coupling of Added Years

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

5. The 1995 Section of the Scheme
The 1995 section of the HSC Pension Scheme is a Defined Benefit Final Salary pension scheme which pays benefits using a defined formula based on member service and pensionable pay
A pension is calculated at a rate of 1/80th of your reckonable pension service multiplied by your final years pensionable pay at retirement.
A Lump Sum is payable equal to 3 times the value of your 1995 section pension with the option to exchange part of your pension for a higher lump sum.
Normal Retirement Age (NRA) is 60 (age 55 for special class members) in the 1995 section

6. 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)

7. The 1995/2015 Schemes
Contribution rates vary from 5% to 14.5% of your pensionable pay
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 1995 scheme benefits before and separate to your 2015 scheme benefits but you must retire from HSC employment
If you retire and claim your 1995 benefits and return to employment in the HSC you cannot re-join the 2015 Scheme.

8. Membership of the 1995 Scheme
The 1995 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 50 at 01/04/2012 (or age 45 if you were a member of the special classes)
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 02/04/1962 and 31/08/65 ( 02/04/1967 and 31/08/1970 for Special Class Members) move to the new scheme at a date after 01/04/2015 – See calculator on scheme website

9. Pensionable Service in 1995 Scheme
Your 1995 scheme pension benefits are calculated using a formula based on the pensionable service you accrue up to your last day of 1995 scheme membership and your final years pensionable pay.
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 22.5 hrs per week as opposed to For each year you worked you would accrue 219 days (3/5 of a year = 219 days)
Over a 20 year period this would mean you had reckonable pensionable service of 12 years as opposed to 20
Reduced paid sickness/maternity are still treated a full pensionable service (subject to part time contracts)

10. Factors which can impact 1995 Pensionable Service
Positive Impacts
Added Years
Additional Hours for Part Timers
Negative Impacts
Breaks in Service.
Unpaid Leave
Career Breaks (where contributions have not been paid)

11. How to Calculate 1995 Section Pensionable Service
Pensionable service is calculated over the period the member pays contributions. An ideal pension record could be as follows:
Mary joins the HSC Pension Scheme on 01/04/1990 and moves to the 2015 Scheme on 01/04/2015
Mary worked full time and has had no breaks in service or no periods of unpaid leave.
Mary’s service is calculated as follows:
01/04/1990 to 31/03/2015 = 25 years
Mary’s 1995 scheme benefits will be based on total pensionable service of 25 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
Dates
FT/PT
%worked
Service
01/04/ /03/1998 FT
100%
8/000
01/04/2004 – 31/03/2006 PT
50%
1/000
01/04/2006 – 31/03/2009
60%
1/292
05/04/2009 – 31/03/2013
2/144
01/09/2013 – 31/03/2015
80%
1/097
Total Service
14/168

13. Pensionable Pay Tiered Contribution Rates
WTE Pensionable Pay
Contribution Rate
Up to £15,431.99
5.0%
£15, to £21,477.99
5.6%
£21, to £26,823.99
7.1%
£26, to £47,845.99
9.3%
£47, to £70,630.99
12.5%
£70, to £111,376.99
13.5%
£111, and over
14.5%

14. Pensionable Pay 1995 Scheme
Your final years pensionable pay is actually the best 365 day period in the previous 3 years from your date of leaving.
If you are in part time service we use the Whole Time Equivalent (WTE) pensionable pay for your grade.
A Part time member’s contribution rate is based on the whole time equivalent salary rate. For example a part time band 5 employee (top of the scale) doing 50% of the standard hours earns £14,658 (£29,315/2).
Their contribution rate falls into the 9.3% bracket. They pay 9.3% of £14,658 as this is the contribution tier their WTE salary falls into.
When calculating their pension we will use the figure of £29,315 as their final years pensionable pay.

15. Steps to Use 1995 Scheme Calculator
Establish your Service which is found on your ABS, add on service from date of ABS to your Transition date if you have not already moved to the 2015 Scheme
Go to HSC Pension Scheme Website
Left side of screen under “Quick Links” you will find “Calculators” located 2/3rds down the list
Click on Calculators
New Page will open with a list of Calculators
Click on “1995 Section Calculators”
New page will Open, Click on “1995 Pension Calculator and VER”
Enter your years and days service in the top yellow boxes, enter your full time pensionable pay in bottom yellow box
Press Return and your estimated benefits will be displayed

16. Pensionable Pay 1995 Scheme
Salary Sacrifice can affect your pensionable pay figure. Member’s pensionable pay is £30,000, they have a salary sacrifice of £5,000. Their pensionable pay is reduced to £25,000
Your 1995 Scheme benefits will have a final salary link and are calculated using your final years pensionable pay at retirement not when you moved from the 1995 scheme to the 2015 scheme
Salary sacrifice will only affect a member of the 1995 scheme if it is applicable in their final 3 years of employment but will affect a 2015 scheme member throughout their period of membership in the scheme

17. Protection of Pensionable Pay
Two types of protection - protection through no fault of the member & Voluntary Protection
Protection of pay for 1995 scheme benefits is applicable up to the date you retire from HSC employment
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
Request should be made within 3 months of reduction to pay

18. Protection of Pensionable Pay
Voluntary Protection of Pay
Member must have attained minimum pension age (MPA) -50/55
Member steps down to a less demanding role
Pay must reduce by at least 10%
Request must be made after 12 months but within 15 months of member going on reduced 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, and from the date of reduction at the lower pay.

19. Protection of Pay Calculation
Jane has 20 years service. Her pay is £30,000. As a result of re-deployment Jane’s pay drops to £24,000. Jane applied for protection of pensionable pay.
At retirement Jane's final year’s pensionable pay is £25,000
As Jan has protected her 1995 Scheme Pensionable Pay, at Retirement Jane's pension will be calculated as follows:
20 years / 80 x £30,000 = £7,500 pension
£7,500 x 3 = £22,500 Lump Sum

20. Protection of Pay Calculation
If Jane had not opted to protect her pensionable pay her benefits would be calculated as follows:
20 years / 80 x £25,000 = £6,250 pension
£6,250 x 3 = £18,750 Lump Sum
The total difference in benefits if protection is not used is
Pension = £1,250 per annum
Lump Sum = £3,750

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 £6,500
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 £2,000 per annum for Female age 45 = £208 per month for 10 years or £19,520 lump sum

22. 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

23. Steps to Use 2015 Scheme Calculator
Go to HSC Pension Scheme Website
Left side of screen under “Quick Links” you will find “Calculators” located 2/3rds down the list
Click on Calculators
New Page will open with a list of Calculators
Click on “2015 Section Calculators”
New page will Open, Click on the 2015 Pension Calculator relevant to your state pension age
Enter your age in years when you joined the 2015 section of the scheme and your annual pensionable pay (not WTE)
Press Return and your estimated pension will be displayed

24. 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
Use the calculator on the website to work the percentage cost for you.

25. 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

26. When Can I Retire? 1995 Section Benefits
The earliest retirement age in the 1995 Section of the scheme is Age 50 (if you have service prior 06/04/2006) otherwise age 55.
If you retire and claim your benefits before your NRA of 60 then they will be reduced
The reduction factor which will be applied to your pension and lump sum is dependant on the number of years & months to your NRA.
The reason the reduction factor is applied is because your benefits will be in payment longer than if you were to retire at your NRA

27. 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

28. Reduction Factors Pension Reduction Factors Lump Sum Reduction Factors
Age 50 51 52 53 54 55 56 57 58 59
Factor
0.661
0.685
0.710
0.738
0.768
0.800
0.835
0.872
0.912
0.955
Lump Sum Reduction Factors
Age 50 51 52 53 54 55 56 57 58 59
Factor
0.789
0.808
0.827
0.847
0.867
0.888
0.909
0.931
0.954
0.977

29. Reduction Factors 2015 Section
Pension Reduction Factors
Years to Retirement 1 2 3 4 5 6
Factor
0.946
0.896
0.850
0.808
0.769
0.733
Years to Retirement 7 8 9 10 11 12
Factor
0.700
0.668
0.639
0.612
0.587
0.563
Years to Retirement 13
Factor
0.54

30. How does VER Affect my Benefits?
Example VER Calculation
Cathy retires at age 58 from the 1995 section of the HSC Pension Scheme and has accrued the following benefits:
Pension = £12,000 per annum & Lump Sum = £36,000
As Cathy is retiring early her 1995 scheme benefits are reduced as follows:
Pension £12,000 x = £10,944 per annum
Lump Sum £36,000 x = £34,344
Survivors benefits are not affected by these reductions

31. 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 58 or at any date in the future.
If we assume Cathy has accrued a pension worth £9,000 in the 2015 scheme by age 58 and wishes to claim it the value of the early payment of the pension is as follows:
Pension £9,000 x = £5,751 (no automatic lump sum)
Cathy’s total VER pension benefits at age 56 are:
Total Pension = £16,695 (£10,944 + £5,751)
Lump Sum = £34,344

32. Other Scheme Benefits Payable
Partial Retirement (2015 benefits)
De Coupling of Added Years
Normal Age Retirement
Ill Health Retirement
Death in Service / Survivors Benefits

33. Partial Retirement/Drawdown
Partial retirement is a feature of the 2015 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 most 90% of pensionable pay received in previous 12 months.
Pensionable Pay must remain reduced for a period not less than 12 months

34. 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

35. Partial Retirement Calculation
Member has built up pension benefits £15,000 in the 2015 scheme and wishes to claim 40% of their pension benefits accrued at age 60 (NRA 67).
Member opts to partially retire by reducing their contract from full time to 80% of WTE. Their pay reduces from £30k to £24k
40% of the members total pension is £6,000 per annum which is reduced to £4,200 (reduction factor of 0.700) as it is taken early
Member has the option to convert part of the £4,200 pension for a lump sum (use the on-line calculator)

36. Reduction Factors 2015 Section
Pension Reduction Factors
Years to Retirement 1 2 3 4 5 6
Factor
0.946
0.896
0.850
0.808
0.769
0.733
Years to Retirement 7 8 9 10 11 12
Factor
0.700
0.668
0.639
0.612
0.587
0.563
Years to Retirement 13
Factor
0.54

37. Partial Retirement Calculation
Member continues to build upon the remaining £9,000 which grows to £13,000 at age 64
Member opts again to partially retire by reducing their contract from 80% WTE to 40% WTE and claim another 30% of their pension. Their pay reduces from £24k to £12k
30% of the members remaining pension in the 2015 scheme is £3,900 per annum which is reduced to £3,315 (reduction factor of 0.85)
Member has the option to convert part of the £3,315 pension for a lump sum (using the on-line calculator)

38. Partial Retirement Calculation
Member continues to build upon the remaining £9,100 which grows to full 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. £12,000 + £4,200 + £3,315 = £19,515
The member will be eligible for the remainder of their 2015 scheme benefits at full retirement plus their 1995 scheme benefits.
Member also has the option to convert part of their remaining 2015 scheme benefits for a higher lump sum at retirement.

39. De-coupling of added years
Added years was a facility in the 1995 section of the scheme which allowed members to increase their pension benefits at retirement by paying additional contributions to purchase extra service
An added years contract was normally taken out to age 60 or age 65.
If you have a current added years contract in the 1995 scheme, you can claim these benefits at the contract end date and continue building up membership in the 2015 scheme

40. Age/Normal Retirement
The Normal Retirement Age (NRA) for members of the 1995 section of the scheme is 60 (age 55 for special classes/mho)
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 1995 & 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

41. Age (Normal) Retirement
When you reach Normal Retirement Age (NRA), Age 60 in the 1995 section (or 55 if you hold Special Class Status) and SPA in the 2015 scheme you can apply for your Pension Benefits.
Your 1995 benefits are calculated on the service you have accrued and your best pensionable pay of the last 3 years of scheme membership.
The following formulae are used in the calculation:
Service/80 x Pensionable Pay = pension
Pension x 3 = Lump Sum
Your 2015 Scheme benefits are calculated on the CARE Formula
You have the option to convert part of your pension to take an additional 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. Steps to Use Pension Commutation Calculator
Use the and 2015 Scheme Calculators to establish the value of your pension and Lump Sum. Take a note of these figures.
Go to the Calculators Page on the Scheme Website
Click on “Pension Commutation Calculator” (below list of calculators)
In Option 1 under the 1995 Scheme Benefits Section enter your original Pension and Lump Sum in the yellow boxes
Similarly In Option 1 under the 2008/2015 Scheme Benefits Section enter your original Pension in the yellow box.
The Calculator will display the maximum lump sum allowed and reduced pension
If you want to choose an additional lump sum but not as high as the maximum enter the amounts of pension you wish to exchange for a higher Lump Sum in the yellow boxes in Option 2

43. Age (Normal) Retirement
Your 1995 scheme benefits will be calculated using your final salary at retirement. This is known as final salary link.
You will receive a pension and a lump sum from this pension service.
Your 2015 Scheme Benefits will be calculated using the Career Average Revalued Earnings (CARE) formula.
There is no automatic lump sum in the 2015 scheme so therefore you will receive a pension for this service
You may opt to give up a proportion of your pension for a higher lump sum in both schemes

44. Age (Normal) Retirement cont.
Karen has accrued 20 years service in the 1995 section of the scheme when she moved to the 2015 scheme at 01/04/2015
Service of 20 years and a pensionable pay figure on retirement of £23,131
Pension = £5,782
Lump Sum = £17,346
Maximum Lump Sum option
Pension = £4,647
Lump Sum = £30,996

45. 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 68
Karen’s pensionable pay on joining is £20,500

46. Age (Normal) Retirement cont
In the 2015 Scheme Karen has accrued benefits of
Pension = £11,524
Karen's total benefits are as follows
Pension = £11,524 + £5,782 = £17,306
Lump Sum = £17,346 (with the option to increase)

47. 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 an additional 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

48. Returning to Work in the HSC
Special Class Nurses & Mental Health Officers who retire between the ages of 55 and 60 who wish to return to employment in the HSC
Members must retire from their job and must take at least a 24hr break from employment
Member is not permitted to work more than 16 hours per week in their first month of re-employment
Members salary on re-employment + their 1995 scheme pension cannot exceed what they earned prior to retirement.
e.g Member retires on a salary of £30,000
Their pension is £10,000. They are therefore permitted to earn £20,000 per year on re-employment.
Normal Members must adhere to points but there is no limit on their earnings

49. 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.

50. Ill Health Retirement (Cont.)
Tier 1 benefits are based on the service you have accrued to date.
1995 Scheme benefits are calculated on the service accrued to date of Transition to 2015 Scheme and Final Years Pensionable Pay.
Service/80 x Pensionable Pay = Pension
Pension x 3 = Lump Sum
2015 Scheme benefits are calculated on the CARE Formula
Tier 2 benefits are calculated on the service you have accrued to date plus a possible enhancement of service up to your state pension age.
The amount of enhancement is 50% of the potential benefits you could have accrued if you stayed in HSC Pension Scheme membership up to SPA

51. 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.

52. 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 dies in service and had an actual annual pensionable pay figure of £22,000 and then the death gratuity payable is £44,000
If a member has at least 2 years service, an initial adult survivors pension is payable for 6 months, to a spouse, civil partner or a co-habiting partner at a rate equal to the member’s pensionable pay.
If a member has at least 2 years service, a long term adult survivors pension is payable at a rate of 50% of pension for 1995 scheme membership and 33.75%. of your notional tier 2 ill health pension for 2015 scheme membership

53. 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).

54. 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

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