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NHS Pension: Treatment of 'protected pay'

saucer Posts: 508 Forumite

5 March 2018 at 2:05PM in Pensions, annuities & retirement planning

Hi all,
I am trying to get my head around how 'pay protection' works in the NHS pension. Basically it is quite likely that I will soon have a reduction on my pensionable pay which I understand will entitle me to apply for pay protection. This in turn should allow my pension, when I retire, which I should add is up 10 years away, to take my current salary into consideration for the Final Salary calculation. What I cannot get my head around is what they mean when talking about Cost of Living (inflation) increases. This is the text from the NHS pension fact sheet:


' If a member has one period of pay protection when they retire, two pensions will be calculated. A pension based on the protected rate of pay* plus cost of living increases for membership up to the date of protection, and a second pension for membership after that date which will be calculated on their pay* at retirement.
If by retirement the protected pay plus cost of living increases is not more beneficial, then the whole of their 1995/2008 Scheme pension benefits will be calculated using pay* at retirement. '


I am trying to understand how cost of living up to date of protection would work. Does that mean that the salary after protection i.e. between now and retirement, would not account for inflation? I have rung NHS pensions and they don't seem to be able to help! I think it must mean the protected pay is increased between the point of protection until retirement. Any thoughts? Thank you again for you help :-)

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Comments

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  ManMadeWays Posts: 66 Forumite

  

  20 June 2018 at 8:12PM

  My wife is in the same situation.I am sure there is a comma missing after the word "increases".
  
  
  
  If a member has one period of pay protection when they retire, two pensions will be calculated.
  
  
  A pension based on the protected rate of pay* plus cost of living increases, for membership up to the date of protection, and a second pension for membership after that date which will be calculated on their pay* at retirement.
  
  
  
  If by retirement the protected pay plus cost of living increases is not more beneficial, then the whole of their 1995/2008 Scheme pension benefits will be calculated using pay* at retirement. '
  
  
  ie 20 years/80 years *£30k old higher pay revalued for 5 years plus 5 years/80 years*£25k final salary
  
  
  
  compared with 25 years total /80years *£25k
  
  
  and if final pay goes up to higher than £30k revalued , you get the higher figure
  

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  saucer Posts: 508 Forumite

  

  21 June 2018 at 12:18PM

  Thank you for replying and resurrecting an old thread!
  I'm sure you are right. It doesn't make sense any other way.

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