Final salary pensions - ie nhs

[Deleted User]

OK. Both person A and person B have to pay set % into final salary pension.

Person A works 40 hours a week for 35 years full time (earning £40K a year, £1K a year of which is pension based on 5% contribs) , then last 5 years of their working life works part-time - 8 hours (£8K per year).

Is their pension then just based on last few years of their working life (i.e the part-time salary)? If its 1/80th then 40/80 x £8000 = £4K pa pension.

Person B works 8 hours a week for 35 years (and pays considerably less into the pension - earnings £8K pa pension contribs £400pa ) then works full time (£40K) for last 5 years (or will just a year do it?). Do they end up getting 40/80th x £40K = £20K pa pension?

In this example, A would have paid £37K contribs over the years, while B would have paid £19K. Yet B would have a pension 5x that of A?

Surely this is not the case? Seems silly to force people, in effect to work more hours in last few years??

stoozie1

"Your final pensionable pay is the pensionable income paid during the best year of the last three years of pensionable service. If you are working part-time or beyond whole-time hours it is your whole-time equivalent pensionable salary that is used.

If you are now in the 2015 scheme your 1995 section benefits will continue to be linked to your post 2015 final pensionable pay for so long as you do not have a break in pensionable service of 5 years or more. Should you have a break in pensionable service of 5 years or more your 1995 section benefits will be linked to the best of the last three years pensionable pay leading up to the break."

https://www.bma.org.uk emphasis mine

Linton

If you work part time you are credited with proportionately fewer years at the equivalent full time salary. So the OPs person B will have a lower pension than person A having only worked for 12-13 (or something like that) full years..

System

[quote=[Deleted User];discussion/5742491]OK. Both person A and person B have to pay set % into final salary pension.

Person A works 40 hours a week for 35 years full time (earning £40K a year, £1K a year of which is pension based on 5% contribs) , then last 5 years of their working life works part-time - 8 hours (£8K per year).

Is their pension then just based on last few years of their working life (i.e the part-time salary)? If its 1/80th then 40/80 x £8000 = £4K pa pension.

Person B works 8 hours a week for 35 years (and pays considerably less into the pension - earnings £8K pa pension contribs £400pa ) then works full time (£40K) for last 5 years (or will just a year do it?). Do they end up getting 40/80th x £40K = £20K pa pension?

In this example, A would have paid £37K contribs over the years, while B would have paid £19K. Yet B would have a pension 5x that of A?

Surely this is not the case? Seems silly to force people, in effect to work more hours in last few years??[/QUOTE]
Of course, that is not the case!
Person A has worked 35 years full time and five years at 20% so has 36 years and gets a pension of £18,000pa.
Person B has worked 35 years at 20% and five years full time so has 12 years and gets a pension of £6,000pa.

Kynthia

Final salary pensions are often:
final fte salary x reckonable service / 60 (or 80)

So your full time equivalent salary is used whether or not you are full time.

Reckonable service is accrued pro-rata. So a year at full time is 1 year reckonable service. A year at 2 out of 5 days a week is only 0.4 years reckonable service.