Pensions for retired returners
As a general rule – if you return to NHS employment while in receipt of your NHS pension – this will not be affected if you are already over your scheme’s Normal Pension Age at the point of returning. Or if you have incurred a reduction to your pension for drawing it early.
In addition, the government’s Coronavirus Act (2020) contains measures which will allow recently retired healthcare professionals to return to work, or increase their hours, without any negative impact on their pension for the duration of the Covid-19 pandemic.
This is important as some retired NHS pensioners would otherwise be in danger of having their pension benefits reduced or suspended if they return to NHS employment. Typically those with Special Class and Mental Health Officer status who return to NHS employment prior to age 60.
NHS Pensions have a very helpful section on their website where you can find more information about returning to work after retirement from the NHS.
New death in service provision for health and care staff during pandemic
Following heavy pressure from UNISON and other health unions, the government has announced a Covid death in service scheme for England, with funding provided to allow devolved administrations to introduce similar schemes.
The NHS and Social Care Coronavirus Life Assurance Scheme 2020 pays out a flat rate of £60,000 to the families of staff who die from the virus during the course of their work. This is separate and additional to any death in service benefits that may be payable to them from NHS pension scheme membership.
It applies to ‘frontline’ health and social care staff, including roles such as porters and cleaners as well as clinical staff. Eligibility is based on having worked in a care environment where patients / service users with Covid were present at any point in the two weeks prior to developing symptoms.
Government issues consultation on “McCloud” age discrimination remedies
The Government has set out two proposals for ending the discrimination between scheme members that resulted from its 2015 public sector pension reforms. These being “immediate choice” and “deferred choice underpin”.
That discrimination, declared unlawful in the Court of Appeal’s 2018 McCloud ruling, took the form of ‘transitional protections’ afforded to those closest to retirement where those within 10 years of their retirement were allowed to remain members of their legacy, final salary pension scheme in 2015, while everyone else was moved into the reformed career average schemes . The court found that this was unlawful discrimination against younger workers and had to be remedied.
Read more at https://www.unison.org.uk/get-help/knowledge/pensions/?utm_medium=email&utm_campaign=Health%20News%20-%2023%20July%202020&utm_source=Health%20Care&utm_content=Read%20UNISON%E2%80%99s%20summary%20paper
Introduction to the NHS Pension Scheme
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 currently contributes 20.68%.
New NHS Pension Scheme 2015
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.
Please see UNISON’s guide on what the NHS Pension Scheme 2015 means for you at https://www.unison.org.uk/content/uploads/2013/06/On-line-Catalogue207333.pdf
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.
How the UNISON pensions unit can help you
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 surgeries subject to resource constraints.
Pensions casework can also be sent to the pensions unit via the usual case protocols.
Total Rewards Statements
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 via ESR or 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.
State pension age calculator
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.
- The NHS Pension Scheme is a voluntary pension scheme available to all NHS employees. Benefits are paid in addition to the New State Pension.
- The NHS Pension Scheme is for all full-time and part-time NHS employees.<
- Eligible employees are automatically included but they can opt-out.
- The scheme particulars are defined by statute and benefits are paid directly from contributions and taxes.
If you want to boost your NHS Pension, have you considered paying into an AVC?
The NHS Pension Scheme is a good way to build up funds towards your retirement. Have you considered potentially boosting your retirement benefits with Additional Voluntary Contributions (AVC’s)?
AVC’s offer another tax efficient way to save for retirement. They run alongside your pension scheme, and are taken from your pay at the same time.
Prudential are one of the AVC providers to the NHS Pension Scheme and have produced this informative leafletwww.pru.co.uk/reasons-to-consider-avcs highlighting the reasons why you might want to increase your retirement savings.
An AVC is one of the options open to you to potentially increase your retirement benefits. Your scheme also provides a number of other options for increasing your NHS pension benefits. For more information please visitwww.nhsbsa.nhs.uk/member-hub/increasing-your-pension.
Please note that the value of your investment into an AVC can go down as well as up and it’s possible you could get back less than you put in
NHS Pension Scheme Q&A’s (England and Wales)
How can I check who I’ve nominated for a lump sum payment on my death?
Your nominations will be shown on your Annual Benefit Statement but in the event of any doubt you should contact NHS Pensions to check who you’ve nominated.
What are the reductions to my pension if I draw it early
If you draw your pension before your Normal Pension Age, the amount you have earned at that point will be subject to a reduction to reflect the fact that you will be receiving it for longer. The exact reduction will depend upon which scheme you are in. You can view these reduction factors here.
If I die, is a lump sum paid out and if so, who to?
Yes, if you die whilst paying into the pension scheme a lump sum broadly equivalent to twice your pensionable pay will be paid out to whoever you’ve specified on a Form (known as DB2) for this purpose. You do not need to complete this Form if you wish for the lump sum to be paid to your spouse or civil partner.
Can I take a tax-free cash sum from my pension?
Yes. If you are a member of the 1995 scheme you will receive a tax-free cash sum of three times your annual pension value and you can still claim more tax-free cash up to a maximum limit should you choose to. If you wish to claim more tax-free cash your pension value will however reduce by £1 for every £12 of extra tax-free cash that you choose to take.
Exchanging annual pension for tax-free cash is known as commutation.
If you are a member of the 2008 or 2015 schemes you can only claim a tax-free cash sum by commuting some of your pension.
Your Annual Benefit Statement will tell you the maximum amount of tax-free cash that you can claim and what this would reduce your annual pension to.
I’m not sure what scheme I’m in – how do I find out?
Your Annual Benefit Statement will tell you which NHS Pension Scheme you are currently contributing to but if unsure you can always use NHS Pensions Member Identifier Tool.
How can I find out the current value of my pension?
You should have online access to an Annual Benefit Statement (ABS) where you can log-in and check the value of your pension when you want to. You can view this through Electronic Staff Records if you have access to this, or irrespective by registering through the ABS online portal
How much notice do I need to give to draw my pension?
It’s recommended that you give at least 4 months notice. You need to ask your employer for an AW8 Form and complete the parts you are required to before returning to your employer. They will then forward this Form to NHS Pensions.
Can I pay more into my pension and if so, what options do I have?
There are three potential options within the scheme for boosting your pension position. You can buy Additional Pension (AP), make Additional Voluntary Contributions (AVC’s) or if you are in the 2015 scheme, enter into an Early Retirement Reduction Buy Out (ERRBO) to reduce your Normal Pension Age. The appropriateness of each option will depend on what exactly you are trying to achieve.
Can I draw my pension early if I’m suffering ill-health?
If your employment contract is terminated on the grounds of medical capability you may be able to draw your pension without any early retirement reduction applying for early payment, irrespective of your age. You may also be able to get an enhancement to your pension if you are unable to undertake any regular employment. More information on the eligibility and entitlement conditions.
Can I “cash” my pension in?
It is generally not possible to give up your pension in its entirety in return for a one off lump sum payment. One exception is if your pension is very small where you could qualify for a “trivial commutation “payment. More information.