National Health Service Pension Question

OurKev

I wonder if anyone here can advise.

A friend has worked in the Health Service for 30+ years, but is facing the possibility of being downgraded ("rationalisation exercise", cutting down on experienced staff).

She may be able to compensate for the eventual drop in salary by working longer hours as she is currently working less than a full week (and has done so for the last 20 years). If she was able to increase the hours worked that may keep her salary at the same level or even increase it slightly.

Her pension date is also approaching and the scheme she on is bases the pension on the best year's salary out of the last 3 years worked.

We are guessing there may be some "rule" disregarding the fulltime salary, or all part-time staff would do the same thing if possible.

If anyone here been in a similar position, we'd love to hear how you were treated.

Of course, she'll enquire via HR but it may take some time to get a definitive answer.

Koicarp

Has she looked here for guidance? http://www.nhsbsa.nhs.uk/pensions

My whole team was downgraded a few years ago but none of us were approaching retirement so cannot answer your question. However she should have protected pay for three full years from the downgrade- ie she won't lose a penny from her hourly rate for three years.
Urgent visit to HR is a MUST of course.

jem16

OurKev wrote: »

We are guessing there may be some "rule" disregarding the fulltime salary, or all part-time staff would do the same thing if possible.

For the purpose of calculating retirement benefits, the full-time salary is used. So for axample someone working 50% of the week would build up years of service at half a year. So after 40 years of working 50% part-time they would have 20 years of service.

http://www.nhsbsa.nhs.uk/Pensions/2675.aspx

Increasing the part-time hours would build up more years of service.

Spirit_2

Two things - pay protection in the NHS varies from Trust to Trust, so there is no gaurantee her employer gives three years protection - she should ask what if any protection period there is and whether it applies to basic pay or basic and enhancements.

Secondly her pension is based on the best of the last 3 years so she may want to crystalise the pension in the next 3 years following her salary reduction so that her final pension is not based on her lower earnings.

OurKev

Thanks for all the help (links very handy and Spirit confirming what we were thinking).

Looks like moving to full time would only have a small impact in terms of maintaining the pension value (as entitlement is based on the part time hours worked so far and the equivalent full time salary is used to then calculate the pension to be paid).

As you say, Spirit, we see that she will really need to take the pension while she has at least one "good" salary (Full time equivalent) within the last 3 years.

In her case she's been told that the protected pay would apply for 2 years - so (being careful about when the salary year starts and finishes) it probably means that she would need to retire within 4 to 5 years.

Thanks again folks!

OurKev

Doing a bit more reading through the links, it looks like there is a further possibility - STEP DOWN.

That looks like it gives the opportunity to effectively split the pension in two:-

1."freeze" the pension at the rate before a reduction in pay with the entitlement accrued to that point
2. Start a new pension based on the new salary and build up entitlement going forward

There are a number of criteria to be met (at least 10% reduction, within retirement range, only do it once), but looks a possibility.

snowcat53

Yes this should be possible. I havent looked up recently but it always used to be, so that people moving into lower grade through choice would not lose out heavily in their pension. As you say the old higher salary pension would be 'paid up' (and so the value indexed from then) and you would start a new one at the lower salary.

I have always found NHS pensions staff very helpful - give them a ring to discuss. They almost always know more than the local Trust staff.

PS Edit : From NHSBA site it is still possible in both 1995 and 2008 sections. Here is link for 1995 info
http://www.nhsbsa.nhs.uk/Pensions/StepDown.aspx

OurKev

snowcat53 wrote: »

Yes this should be possible. I havent looked up recently but it always used to be, so that people moving into lower grade through choice would not lose out heavily in their pension. As you say the old higher salary pension would be 'paid up' (and so the value indexed from then) and you would start a new one at the lower salary.

I have always found NHS pensions staff very helpful - give them a ring to discuss. They almost always know more than the local Trust staff.

PS Edit : From NHSBA site it is still possible in both 1995 and 2008 sections. Here is link for 1995 info
http://www.nhsbsa.nhs.uk/Pensions/StepDown.aspx

Thanks for the link - and she would qualify.

Once again, thanks for all the very helpful responses.

Knowing that the pension can be "protected" even if she carries on working at a lower salary will certainly take some pressure off.

Cheers