Scottish NHS: Pensions
Update Briefing No.170
November 2007
Introduction
This briefing provides an overview of the changes
to the NHS Pension Scheme in Scotland. The NHS Pension Scheme
Review has been undertaken by the Scottish Pensions Review Group
(SPensiR) – a partnership between employers, trade unions/professional
organisations and the Scottish Government. The group was tasked
with developing a sustainable pension scheme fit for the NHS in
21st century Scotland.
Two NHS Pension Schemes
The new arrangements for the NHS Pension Scheme
in Scotland will mean that from 1 April 2008 there will be two
pension schemes i.e. the current NHS Pension Scheme updated and
a new NHS Pension scheme for those joining the scheme for the
first time from 1 April 2008. Active members of the current scheme
will be given a choice with regard to joining the new scheme in
early 2009. In both schemes pension benefits will be based on
final salary.
NHS Pension Scheme - updated
The key aspects of the current pension scheme will
remain largely unchanged. This includes normal retirement at 60
(55 for Special Classes) while the pension scheme will retain
an accrual rate of 1/80ths with a tax free lump sum of 3/80ths.
However, there are also some improvements to the scheme including,
a new option for members to 'top-up' their lump sum to up to 25%
of their total pension fund, partner pensions for eligible unmarried
partners and more flexibility in the run up to retirement. Additional
changes also include the opportunity to pay into the scheme for
a total of 45 years, regardless of age as well as a new option
for topping up the pension – which replaces added years, while
earnings caps will be removed from service from 1 April 2008.
New NHS Pension Scheme
For staff who join the pension scheme from the 1st
April 2008 onwards, they automatically become members of the new
NHS Pension Scheme. This scheme, will remaining a final salary
scheme, has some differences with the updated scheme. This includes
the normal pension age being set at 65 (with no exemption for
Special Classes); no automatic lump sum but able to choose to
commute up to 25% of pension fund as lump sum payment; a higher
accrual rate of 1/60th; the ability to take part of
pension while continuing to work and accruing further pension;
and partner pensions for full service. In addition, the final
salary will be based on the average of the best 3 years in the
last 10 before retirement.
Contributions
How much you contribute will depend on how much
you earn (your pensionable pay) or the equivalent amount if you
work part time. The contribution rates for both schemes are outlined
in the table below. Your contribution rate will depend on your
pensionable pay, or the equivalent amount if you work part time.
In 2008/2009 your contribution rate will be based on your pensionable
earnings for 2007/2008. There is no change to the employer rate
which remains at 14.4%.
|
Annual Pensionable Pay
(Full time equivalent)
|
Current Contribution
|
New Contribution
|
|
Up to £19,682
|
5% (manuals) or 6%
|
5%
|
|
£19,683 - £65,002
(Linked to AfC pay point 17)
|
5% (manuals)
6%
|
6.5%
|
|
£65,003 - £102,499
(Linked to AfC pay point 49)
|
6%
|
7.5%
|
|
£102,500 plus
|
6%
|
8.5%
|
Pension Transfer
Members in the current scheme will be given an option
to transfer to the new scheme on the basis that they will take
all of their service with them. It is anticipated that a choice
exercise will take place early in 2009, at which time all members
of the current scheme will be provided with sufficient information
in order to make an informed decision. It should be noted however
that neither the SPPA nor NHS employers are permitted under law
to give financial advice. Members with deferred benefits in the
current scheme who return to NHS employment on or before 30th
September 2008 will rejoin the current scheme as amended. Those
returning from 1st October 2008 after a break in their
NHS employment of less than 5 years will also be able to choose
to remain in the current scheme.
Ill Health Consultation
A separate but parallel review of ill health retirement
has also been taking place, again in partnership with SPensiR.
Agreement has now been reached on reform of ill
health retirement and consultation commenced on 24th
October 2007. The consultation document and response forms are
available from the NHS pension reform pages fo the SPPA website
at http://www.sppa.gov.uk/pension_reform/nhs.htm.
The closing date for completed responses and comments is Friday
14th December 2007.
Action for Branches
This briefing paper is intended to update members
on changes to the NHS Pension Scheme and to inform them of a consultation
on ill health retirement.
UNISON Scotland will be submitting a response to
the consultation on ill health retirement and would encourage
members to forward any relevant information they may have to the
P&I Team as part of this response.
Further Information
UNISON Scotland
http://www.unison-scotland.org.uk
SPPA NHS Pension Reforms
http://www.sppa.gov.uk/pension_reform/nhs.htm
Contacts list:
Willie Duffy
w.duffy@unison.co.uk
Kenny MacLaren
k.maclaren@unison.co.uk
Dave Watson
d.watson@unison.co.uk
@ the P&I Team
14 West Campbell St
Glasgow G26RX
Tel 0141-332 0006
Fax 0141-307 2572
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