THE NEW NHS PENSION SCHEME

Membership of the Scheme is voluntary. When you start working for the NHS you will automatically become a member (excluding freelance locum medical practitioners). You can opt not to join and can leave the Scheme at any time. If you choose to leave you can usually rejoin at any time provided you are not absent from duty for any reason.

 

What does the Scheme provide?

  • A retirement pension based on 1/60th of your reckonable pay* for each year and proportionally for any part year of Scheme membership
  • An option to take a lump sum, normally tax free
  • Life assurance of 2 years' reckonable pay while you are working
  • If you die, pensions for your spouse or partner. Allowances are also payable for dependent children
  • Benefits if you have to leave work because of permanent ill health after 2 years membership
  • Options to increase your benefits by paying additional contributions
  • Fully indexed and guaranteed to protect the value of pensions and allowances

 

* Reckonable pay is the average of the best 3 consecutive years' pensionable pay in the last 10 prior to benefits being taken. Where less than 1 years pay is available, the pay will be increased pro rata to a full year. If more than 1 year but less than 3, the averaging will be over the actual period of pay available.

 

Life assurance and family benefits

 

You are automatically covered by the Scheme's life assurance benefits from the day you join.

 Pensions to surviving partners can be paid to a legal spouse or registered civil partner or a nominated partner.

A survivors pension for your legal spouse, civil partner or nominated qualifying partner is payable for life. The survivor's pension will be 37.5% of your own pension. There are also allowances for dependent children.

What if I die in pensionable employment?

If you die in pensionable employment the Scheme will pay a lump sum equal to 2 years' reckonable pay provided you have not drawn down any of your pension.

How much will the survivors pension be?

  • If you have less than 2 years membership when you die, your spouse/partner will get a short term pension of 6 months
  • If you have more than 2 years membership when you die, your spouse/partner will get short term pension of 6 months and then a survivors pension payable for life.
 

What does it cost?

Contribution rates are tiered depending on your level of whole-time equivalent earnings (based on basic salary only and not including band up-lifts):

  • Up to and including GBP 19,682 - 5%
  • GBP 19,683 - GBP 65,002 - 6.5%
  • GBP 65,003 - GBP 102,499 -7.5%
  • GBP 102,500 and over - 8.5%

 

But the actual cost is normally between 3.5% and 5% of net pay because:

  • Your contributions attract tax relief;
  • You pay a lower rate of National Insurance contributions because you are contracted out of the State Second Pension (S2P).

 

Your employer contributes an amount equal to 14% of your pensionable pay.

For example, if you were a Speciality Registrar in year 1, your basic NHS salary for 2009/10 would be GBP 29,411 - this would mean contributing 6.5% into the scheme which would equate to GBP 1,911 (of which only GBP 1,872 would be paid by you after tax relief but before NI contributions).

What are my options if I leave the NHS or decide to leave the Scheme?

If you have been within the Scheme for 2 or more years you can leave your benefits within the Scheme. These are called deferred benefits and the value is fully index linked.

You may be able to transfer the benefits to another pension provider even if you have less than 2 years service.

If you have been a member of the Scheme for less than 2 years you can have a refund of the contributions (Tax and National Insurance contributions will be deducted to buy you back into the State Second Pension).

Ill-health retirement - Tier 1 & Tier 2

pension_nhs.jpegIf you have at least 2 years membership, and become permanently incapable of doing your present NHS job because of ill-health you may receive your retirement benefits earned to date early. This is known Tier 1.Tier 1 provision will not be increased.

If your illness makes you permanently incapable of ANY regular work of like duration to your NHS job, the pension will be calculated after first increasing your actual membership by two-thirds of the membership you could have got had you continued as a member to age 65. This is referred to as a Tier 2 pension. A minimum increase of 4 years membership capped at age 60 will apply until 31 March 2016 in the NHS Pension Scheme only.


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