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When you start working for the NHS you will automatically be included in the NHS Pension Scheme. The scheme is voluntary, so you can choose to opt-out if you wish.
The amount you pay into your pension is dependent on how much you earn and the current contribution rates are between 5% and 14.5%. Your rate is determined on your full-time equivalent pensionable pay.
Your contributions are deducted from your gross pay which means less of your income is taxable. This in effect means that your actual contribution taking into account tax relief is between 4% and 8.7%. Your employer on the other hand (from 1 April 2015) contributes 14.3%.
From 1 April 2015 a new NHS pension scheme came into effect. Members working in the NHS should have received a leaflet in their payslips about the new scheme earlier in the year.
The new pension scheme reflects the changes that were negotiated and fought over between the government and the NHS trade unions back in 2011.
In 2011, union members took strike action over the initial government proposals for changes to public sector pensions. Following further negotiations, the government made significant changes to the proposals and the Proposed Final Agreement (PFA) for the NHS pension scheme was produced.
UNISON’s health service group executive agreed that this was the best that could be achieved through negotiation.
Since then, the NHS trade unions sought to ensure that the pension regulations for the new 2015 scheme reflected the wording of the PFA and that no changes that were not negotiated or originally agreed were included.
From 1 April 2015 members of the 1995 or 2008 sections of the NHS pension scheme without ‘full’ or ‘tapered protection’ moved to the new 2015 pension scheme [see Protection section below].
Some of the main features of the new scheme are:
- It is a type of defined benefit scheme which provides pension benefits based on a fixed formula
- It is a Career Average Revalued Earnings (CARE) scheme, rather than a final salary schemewhere benefits are built up on the value of your pensionable earnings each year during your NHS career
- The pension build up rate is 1/54th of pensionable earnings in each year with no limit on the amount of pensionable membership which can be built up
- This 1/54th fraction is better than the current 1995 and 2008 Sections
- Each year’s pension earned will increase every year in value by the Consumer Price Index (CPI) plus 1.5 % per year
- The age at which benefits can be claimed without reduction for early payment (normal pension age (NPA)) is the same age as your State Pension Age (but cannot be lower than 65)
- Pension benefits already built up in the 1995 and 2008 sections will be retained and calculated by reference to your final pay at retirement. You will still need to retire from NHS employment in order to access your 1995 or 2008 section benefits. You will not be able to access your 2015 benefits without reduction for early payment until your normal pension age for the 2015 pension scheme.
UNISON has produced a PowerPoint presentation on the new scheme (see Resources tab).
Protection is the arrangement under which certain members of the NHS Pension scheme will remain in their current section of the NHS Pension Scheme indefinitely or will move to the new scheme at a later date, depending on the form of protection they have.
If you were within 10 years of your NHS Pension Scheme Normal Pension Age – the age at which they can retire without a reduction in pension benefits – as at the 1 April 2012 you remain in the 1995 or 2008 Section until you retire or otherwise leave the scheme. For most 1995 Section members this means 50 or over (or 45 for Special Class and MHO members) and 55 for 2008 Section members.
If you were more than 10 years but less than 13 years and 5 months from your Normal Pension Age 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 1 April 2015 but will ultimately have to move by no later than the 1 April 2022.
If you are a member of the 1995 or 2008 Section and were, at 1 April 2012, more than 13 years and 5 months away from your Normal Pension Age you will move to the new 2015 Scheme on 1 April 2015.
Changes to the NHS Pension Scheme that took place on 1 April 2015 have potential implications for anyone involved in a salary sacrifice scheme. If you are currently participating in a salary sacrifice scheme and are now in the new NHS Pension Scheme 2015 you should consider whether this is still in your best overall financial interest. Read UNISON’s briefing 'Salary sacrifice arrangements and your NHS pension: advice for UNISON members' under the "Resources" for more information.
Please note the deadline for making your Choice 2 decision has now passed.
As part of the move to the new 2015 NHS Pension Scheme, the Choice 2 exercise is another opportunity for over half a million members of the 1995 section, who do not have full protection, to consider transferring the current pension they’ve earned to the 2008 Section.
The NHS trade unions pushed for the Choice Exercise to be run again, because the State Pension Age (SPA) for these members is now higher than when the original Choice Exercise was run. Therefore, it is likely that a move to the 2008 section will be beneficial for a larger number of people than when the original Choice Exercise took place, because many members will now feel they will have to work longer due to the increase in the SPA and NPA in the 2015 scheme.
If you work longer (ie closer to or in excess of 65 rather than 60) then in many cases it will be better to have your pension in the 2008 Section than the 1995 Section because of the better pension build-up rate.
Choice 2 allows members to transfer all of their 1995 Section service into the 2008 Section of the NHS Pension Scheme. Any member wishing to transfer, needs to make a positive election to do so before 16 th March 2015.
All eligible members in England and Wales should have received a personalised letter through their employer between October and December 2014. A similar exercise is likely to take place in Scotland and Northern Ireland in 2015.
UNISON has produced a PowerPoint presentation on Choice 2 (see Resources tab).
Further information on Choice 2 is available from the NHS Pensions website at:
UNISON has a pensions unit dedicated to dealing with issues concerning our member’s pension schemes and rights. The pensions unit has two full-time officers plus secretarial support.
The unit will always do what it can to accommodate branch/regional requests for pension briefings and pension surgeriessubject to resource constraints.
Pensions casework can also be sent to the pensions unit via the usual case protocols.
Alan Fox leads on NHS pensions and can be contacted at email@example.com or 020 7121 5514.
All NHS staff are now entitled to a Total Reward Statement (TRS) each year. This will include an Annual Benefit Statement (ABS) for pension scheme members.
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, plus your predicted pension at your Normal Pension Age if you are remaining in the 1995 Section.
You can view your statement online at www.totalrewardstatements.nhs.uk. You will need to register through the site and request an activation code to be able to view your personal statement.
The State Pension Age will increase to 66 from October 2020, 67 by 2028 and 68 by 2046.
You can check your State Pension Age and Normal Pension Age in the 2015 NHS Pension Scheme by going to www.gov.uk/calculate-state-pension.
Option to give up protection for 2008 Section members
Some members of the 2008 section with full or tapered protection may gain from giving up this protection and joining the 2015 scheme with effect from 1 April 2015.
This is because if these members do not receive a pay increase before retirement, the better pension build-up rate in the 2015 scheme may give them a better pension.
A standalone exercise will commence after the introduction of the 2015 scheme giving approximately 35,000 members the chance to give up their protection.
1995 Section members are not eligible as modelling showed that it is unlikely to be beneficial for them.