NHS Pension - Part Time Work

EdGasket

According to my wife's information they base the pension on the best year's income of any of the last three. Therefore my and my wife's understanding are exactly what you suggest; i.e. you can work one year full-time and your NHS pension under the old scheme will be based on a full-time salary. It sounds too good to be true but I can assure you that is what it says in black and white; no ifs or buts.
Well please let us know what official answer you get?

hyubh

EdGasket wrote: »

According to my wife's information they base the pension on the best year's income of any of the last three. Therefore my and my wife's understanding are exactly what you suggest; i.e. you can work one year full-time and your NHS pension under the old scheme will be based on a full-time salary.

There is no 'therefore': the 'pension under the old scheme' is always 'based on a full-time salary', assuming we aren't talking about the GP's section (which is already career average) - i.e., the best 365 days over the final three years is a rolling average of full-time equivalent salaries. As such, if we ignore your use of the word 'income' (which is incorrect), what you have read doesn't contradict what jem16 and others have said here.

Well please let us know what official answer you get?

Read 'Members working part time' here:
http://www.nhsbsa.nhs.uk/Pensions/2675.aspx

Or just go to source and read the 2008 scheme Regulations:

'The number of days of a member’s pensionable service in part-time employment for a period is calculated by multiplying the total hours of employment during the period by 7, and dividing by the number of hours of employment per week for a comparable whole-time employment'

'The member’s reckonable pay for that period in respect of the part-time employment is the amount that would have been paid in respect of that employment for that period if it had been a whole-time employment not held concurrently with any other employment.'

The rolling average thing then appears under the phrase 'the best consecutive 1095 day period'. See http://www.legislation.gov.uk/uksi/2008/653/pdfs/uksi_20080653_en.pdf

jem16

EdGasket wrote: »

According to my wife's information they base the pension on the best year's income of any of the last three.

That is correct as in the best year's salary of any of the last three.

Therefore my and my wife's understanding are exactly what you suggest; i.e. you can work one year full-time and your NHS pension under the old scheme will be based on a full-time salary.

NHS pensions, and for that matter ALL Public Sector pensions, use the full-time equivalent salary for calculations.

From the NHS pension website;

Members working part time
For calculating benefits, membership means the actual membership you have accrued in the Scheme. So someone who has worked part time, say 50% of standard full time hours, for 20 years will have 10 years membership counting towards their benefit calculations. However, the other main factor in calculation benefits - final years pensionable pay, or reckonable pay - is based on the full time equivalent salary for that job. So in the example the part time worker may have earned £10,000 a year but for the purpose of calculating benefits the full time rate of £20,000 is used.

It sounds too good to be true but I can assure you that is what it says in black and white; no ifs or buts.

No you are correct - there are no ifs and buts.

Basically you, your wife and obviously countless others have misunderstood how the benefits are calculated.

EdGasket

So are you saying there is no difference in the amount of pension you get whether you work part-time or full-time and that there is no need for a part-time worker to do one year of full time to get the equivalent full-time pension? Totally confused by what you say.

jem16

EdGasket wrote: »

So are you saying there is no difference in the amount of pension you get whether you work part-time or full-time and that there is no need for a part-time worker to do one year of full time to get the equivalent full-time pension? Totally confused by what you say.

Did you read the quote I gave you from the NHS pension website?

For calculating benefits, membership means the actual membership you have accrued in the Scheme. So someone who has worked part time, say 50% of standard full time hours, for 20 years will have 10 years membership counting towards their benefit calculations.

The important bit there is that if you have worked for 20 years full-time you will have 20 years service. Your pension is therefore 20/80ths of final salary ( or whatever is better of the last 3 years). If the full-time salary was £20k the pension would be £5,000pa.

If you work 20 years part-time ( ie half a week) you will have 10 years of service so will have 10/80ths of your final salary. The salary used will be the full-time equivalent. If the part-time salary was £10k, the full-time equivalent would be £20k so the pension would be £2500.

So someone doing half a week for 20 years would have exactly half of the pension that a full-time worker would have.

If the service was 19 years of part-time (half a week) and one year of full-time, the service built up would be 10.5 years. Salary used is still the full-time equivalent at £20k so pension would be £2625. So working full-time in the last year will get you an increase in pension but only 0.5/80ths of an increase - ie £125 in this example. It's not going to suddenly turn your pension into double what it would be.

Basically the only difference that part-time working makes is the accrual of years of service - ie membership. Full time salary is always used.

EdGasket

So why does it say it will be based on the best year's pay out of the last three? Obviously if you work full time you will earn more than you would part time
Here's what the pension guide says that my wife was given, word for word:

The pay used to work out your benefits:
The best pay that you received in any of the three years before retirement. This is known as Final Year's Pensionable Pay.

So surely that pay 'used to work out her benefits' would double if she went from 50% part-time to full-time. That's what it says, I see no other way of interpreting it. However I accept that she probably won't get double pension if she went full-time for one year as that doesn't seem right. Just that the pension book is very confusing.

molerat

The rules are quite simple. The pay used is the full time equivalent of the part time role so if employed at .5 FTE the pay used for the pension calculation would be 2 x actual pay but would only be accruing .5 years reckonable service per year worked. Working full time or part time makes no difference to the "final years pensionable pay" but does increase the reckonable service, so yes if you work full time for the last 3 years you will receive a higher pension but only because the n/80ths have increased.

jem16

EdGasket wrote: »

So why does it say it will be based on the best year's pay out of the last three? Obviously if you work full time you will earn more than you would part time
Here's what the pension guide says that my wife was given, word for word:

The pay used to work out your benefits:
The best pay that you received in any of the three years before retirement. This is known as Final Year's Pensionable Pay.

Simply because pensionable pay is always the full-time equivalent pay.

So surely that pay 'used to work out her benefits' would double if she went from 50% part-time to full-time.

No it doesn't as pensionable pay is the full-time equivalent pay. That does not change whether you work full-time or part-time. Only the length of service (ie membership) varies.

EdGasket

Yes I think I see that but the handbook does not say that in a comprehensible manner and is misleading in saying that the pension will be calculated on the best pay for the last three years. Thanks for everyone's help on this.

jem16

EdGasket wrote: »

Yes I think I see that but the handbook does not say that in a comprehensible manner and is misleading in saying that the pension will be calculated on the best pay for the last three years.

Perhaps think of it in this scenario.

Someone works for the NHS full time for 37 years. Coming up to retirement they feel that full-time working is getting a bit much for them so they drop down to part-time (0.5) working for the last 3 years. If your interpretation was correct, their pension would be based on a half salary. Would that be fair?

Thanks for everyone's help on this.

No problem. At least your wife now knows how her pension will be calculated.