All change for NHS Pensions
The NHS Pension Scheme is changing. On 21 September NHS Employers
and the NHS trade unions announced the final agreement on a series of
changes to the pensions of over one million employees. The
arrangements, which came after four years of negotiations, were
welcomed by Department of Health minister Ben Bradshaw.
The changes will come into effect on 1 April 2008. Existing staff keep their normal pension age of 60 and both existing and new staff will have a final salary pension. New contribution rates linked to salary are to be introduced, but implementation will be phased in over 12 months. In addition, the first contribution tier will include everyone earning less than £19,166. Those who are not members before 1 April 2008 will be able to join the New NHS Pension Scheme.
Paul Bromley, SoR’s lead officer for pensions, welcomed the changes: “The new scheme is far more flexible, allowing staff more options in balancing work and retirement. This agreement is good for staff, their employers and the taxpayer.”
Existing scheme members will:
- Keep a normal pension age of 60 (or 55 for staff with special rights) and the right to take a pension after the age of 50;
- Keep a final salary pension with a 1/80th accrual rate and a 3/80th lump sum for each year of service based on the best of the last three years of work before the age of 60;
- Have a new option to take a larger lump sum, up to 25% of the value of the pension, in return for giving up some of their pension;
- Have survivor pensions extended to partners in addition to widows, widowers and civil partners;
- Be able to continue paying into their pension beyond their current normal pension age and build up their pension up to a total f 45 years regardless of age.
New scheme members will have:
- A normal pension age of 65 and the right to take a pension after the age of 55;
- A final salary pension with a 1/60th accrual rate for each years of service based on the average of the best three consecutive years of membership in the ten years before retirement (allowing staff to take a lower paid job in the run up to retirement but have their salary calculated on the higher salary they had before stepping down);
- The choice between converting up to 25% of the pension into a limp sum or foregoing a lump sum in favour of a larger annual pension;
- A more flexible pension with the ability to take all or part of the pension while continuing to work and build up more pension.
Other additional benefits to both existing and new schemes include extending survivor pensions for children up to age of 23 and giving everyone short-term death in service benefit for six months.
The option to buy added years will be removed (although existing contracts will be retained) but staff will be able to top us their retirement income by buying up to £5,000 of additional pension.
Both existing and new GPs and dentists will have a career average scheme, with the same benefits as other staff. Existing members will keep their accrual of 1.4% whilst those on the new scheme will have an accrual rate of 1.87% with choice on lump sum. In both cases, the pension will be annually dynamised by the Retail prices Index plus 1.5%.
These arrangements relate only to England and Wales.The Scottish and Northen Irish health departments will be making separate announcements on similar arrangements.
For further information about NHS pensions visit: www.nhsemployers.org and www.pensions.nhsbsa.nhs.uk. Click here to download the NHS leaflet on the changing pension scheme.
How will changes to the NHS Pension Scheme affect your nest egg?
Posted: 26/09/2007
|
|