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NHS Pension Review

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Average NHS pension - 5,400 with membership of 18 years ... MHO status maintained for those who have. The Bad. Added Years possibly stopped ... – PowerPoint PPT presentation

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Title: NHS Pension Review


1
NHS Pension Review
  • Mark Belchamber
  • Head of Pensions

2
NHS Pension Review
  • Consultation period
  • EW 10th Jan - 11th April 2005
  • Scot NI 24th Jan - 30th April 2005

3
Why a NHS Pension Review
  • 77 workforce is female
  • Almost 50 work part time
  • Average NHS pension - 5,400 with membership of
    18 years
  • Life expectancy 1950 - 69.2 2005 - 77.2
  • Av retirement age dropped to 62 years
  • Pension paid av. 24 years (21yrs 10 yrs ago)

4
The Good
  • Same benefits for widows and widowers
  • Initial payments - WW 6 months (was 3 or 6)
  • Improved death in service benefits for those with
    no dependants
  • Survivor benefits to all named partners
  • No cessation of benefits on re-marriage

5
The Good II
  • Better protection where employees lose pay thru
    no fault of their own e.g. org change
  • AVCs - either have 1 or 3 providers
  • Added pension -
  • in-house AVC arrangement - buy extra pension
  • and / or revised added years arrangement.

6
The Good III
  • Either no abatement at all or only on the
    enhanced element of the pension
  • Accrual rate - from 1/80th (1.25) to 1/60th
    (1.67) - (1.4 to 1.87 for practitioners)
  • Improved flexibility for lump sum / pensions
  • Membership limits 16 - 75 (max 59 years!)
  • 1.5 million lifetime allowance

7
The Good IV
  • Pension enhanced if retiring past 65 yrs old (and
    possibly for past 60!)
  • Pension Flexibilities - e.g ability to draw down
    pension at 55 years keep working and
    contribute to pension.
  • All NHS work incl. overtime - pensionable if CARE
    adopted. Need to pay more too.
  • MHO status maintained for those who have

8
The Bad
  • Added Years possibly stopped
  • Minimum age of retirement - 55 years old. still
    50 for existing staff
  • Minimum age without actuarial reduction in
    pension (full pension) - 65 years old
  • Some new benefits but no new money!
  • No solution for Pre88 widowers

9
The Ugly??
  • Final salary / Career Av. Scheme - CARE
  • Reduced Value of pension at age 60
  • Improved Accrual Rate includes lump sum
  • Improved accrual rate - balancing effect?
  • Higher contributions for higher earners?
  • Maximum limits reached for some members

10
The Accrual Rate
  • The rate at which you build up pension
  • 40 years in the current scheme
  • Average salary - 80K Total 3,200,000
  • 1.4 x 3.2m pension 45K and 135k L/S
  • 1.8 x 3.2m pension 58K but no lump sum. (or
    46k and 135k L/S)
  • 1.87 x 3.2m pension 60K but no lump sum. (or
    49k and 135k L/S)
  • 1.8 or 1.87 full pension only at 65

11
The detail - change to 65 years
  • No one currently working in NHS will HAVE to work
    until 65 years old
  • Examples show some extra time needed though - 2.5
    years if aged 20
  • Extra time related to age when 65 accepted

12
The detail - change to 65 Years
  • Pension benefits earned AFTER 2013 - only payable
    in full at 65 years old
  • Pension benefits ALREADY earned - payable in full
    at 60 years old including added years unless
  • Doctor, by choice, transfers all benefits into
    new scheme when given option (2008 or 2013?)

13
The Detail CARE v Final Salary
  • FT Cons with full NHS career
  • Final Salary Pension 86,000
  • CARE Pension 63,000
  • 23,000 per year difference
  • To buy 23,000 of pension costs....

14
  • 460,000

15
What happens next?
  • Read the documents
  • Tell us your views - over 1000 e-mails recd
  • Complete BMA survey online - 2000
  • Responses collated and reviewed
  • Draft to Council - early March
  • Pensions Committee special meeting 23/3/05

16
What happens next cont.
  • Responses needed for each devolved nation.
  • Local issues considered.
  • DEADLINE 11 April - EW, End April Scot and NI.
  • Responses considered by Review teams made up of
    TUs and Employers in each Nation.
  • Recommendations to Ministers - May?

17
Decisions?
  • Possible General Election in May
  • Unlikely decisions taken before this.
  • Once decisions made, further negotiation
  • New scheme effective April 2006 - new staff. (may
    be delayed and backdated??)
  • Transition options for existing staff 2008?
  • 2013 Existing staff transfer decision??

18
Recap.
  • Lots of positive changes
  • Some not so good!
  • Some very worrying - - NPA65 - CARE
  • Still plenty of chances to influence decisions
    before final shape determined.
  • Continued involvement of BMA in process.

19
NHS Pension Review
  • Questions
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