NHS pension query

Jitter

I'm attempting to work how my wifes NHS pension will be calculated and have 2 queries at this stage.

Just taking into consideration the 1995 section for now some of the guidance suggests "your final pensionable pay is the last pay reported to us", but elsewhere "average of the best 3 conscecutive years in the last 10". Can anyone confirm which is correct?

I'm also not sure how to interpret "If you work part time we calculate your final pensionable pay as if you work full time". Does this mean that is for instance you worked 4 days a week and earned £20k the pensionable pay would be the equivalent full time rate of £25k?

Any advice appreciated!

saucer

https://www.nhsbsa.nhs.uk/sites/default/files/2017-04/Age%20retirement%20%2804.2017%29%20V3.pdf

The amount of membership your wife has will be determined on the equivalent number of full time years i.e. work 20 years half time would equal 10 years of membership. That is how the part-time work comes into play. The pension is then based on the full-time pay for her banding. In other words for the 1995 scheme they take the best year in her last 3 and make it up to full time for the purposes of working out the pension.

Korkyb

Can I ask a follow on question that affects me? (may be useful to Jitters as well).


How would unsocial payments affect this final year if someone went from full time to part time before those last 3 years (I work a lot of unsocial hours...).


I hope to go part time before my NPA but need to figure out how this would affect my pension "best year".


i.e. (Made up figures)


Full time base salary = 40k
Salary + Unsocial = 50k


Part time 18.5hrs Salary = 20k
Part time salary + unsocial - 25k


Would the best year if part time be made up to:


40k (effectively negating the unsocial hours).
45k (full time base + part time unsocial).
50k (fully pro rata as if I was full time doing full time unsocial).




If it was only made up to the 40k or 45k then would I be better coming out of the scheme before my last full time best wage wasn't within the last 3 years?


If its made up to the 50k (then I may be better dropping contracted hours & increasing unsocial hours).


I'm currently aged 52 - hoping to go part time around 55 NPA 60. (also considering taking pension early but aware payments would be actuarially reduced so hoping to hold off as long as possible).


It really does make your head hurt all this doesn't it....

Jitter

It really does make your head hurt all this doesn't it....

Yes! - I hope someone who know more than me can answer your question

In 29 years my wife did a mixture of full time, part time and on call, after trying to work out the equivalent number of full time years I got as close as I could but will have to trust their calculation!

GunJack

Surely it will depend on whether your unsocial hours premium is pensionable pay or not - ask nhs pensions if not sure, it depends on scheme rules.

For example, when I was in the Civil Service, Sunday overtime rate (single time) wasn't pensionable, but the Sunday Premium (also single time) was, so say a Sunday was worth £200, only £100 was pensionable.

Korkyb

GunJack wrote: »

Surely it will depend on whether your unsocial hours premium is pensionable pay or not - ask nhs pensions if not sure, it depends on scheme rules.

For example, when I was in the Civil Service, Sunday overtime rate (single time) wasn't pensionable, but the Sunday Premium (also single time) was, so say a Sunday was worth £200, only £100 was pensionable.

My unsocial hours do count towards my pensionable pay.


Its how this is dealt with when working part time I'm wondering about.

tacpot12

When you go part time, it effectively reduces the rate at which you acquire reckonable service within the scheme (as saucer said above.) The Final Salary amount stays the same when you go part-time, save for any pay increases.

Just taking into consideration the 1995 section for now some of the guidance suggests "your final pensionable pay is the last pay reported to us", but elsewhere "average of the best 3 consecutive years in the last 10". Can anyone confirm which is correct?

For calculating your pension under the 1995 section, neither is correct! They do use "the last pay reported to us" is used for estimating your 1995 section pension, but not for calculating the pension when it is paid. So if you look at a Pension Forecast on your Total Rewards Statement (TRS), this will use the last pay reported to NHSBSA which will probably 18 months out of date!

When the 1995 section is paid, they look back at every 12 month period from the date you stopped work going back for upto three years to find the highest salary (as saucer said above). So if you stop on 31st July 2019, they will look 1st Aug 2018- 31st July 2019, 1st July 2018 - 30th June 2019, and so on right the way back until 1st Aug 2016-31st July 2017 to find the highest final salary.

I don't know for sure about your unsocial hours, but assuming you are only paid the unsocial rate for the actual hours you work that are unsocial, this will increase the rate at which you earn reckonable service. The increase in rate will be the proportionate to the ratio of social to unsocial hours you work AND the pay increase for the unsocial hours, so it will be difficult to get a precise figure. One way to deal with this is to work part time for four years prior to retiring as this will allow you to see the additional service you are being credited with for unsocial hours as part of your TRS. However, if all the hours you work are unsocial then the increase in reckonable service will only be proportionate to the pay increase for unsocial hours.

Either way, it doesn't alter what is best for your in terms of pension income because they multiply the final salary by reckonable service. So if the credit for unsocial working is given to the final salary, you get less reckonable service, or if the credit for unsocial working is given to reckonable service, you get a lower final salary, but the end result is the same.

If you go part-time at 55 and retire at 59. You will have accrued less reckonable service (due to being part-time) and you final salary will be lower because you will have missed out on a pay rise in the final year, AND you would have the actuarial reduction for taking the pension a year early.

If you have any savings or pensions that would allow you to leave NHS employment before the NPA but claim the 1995 scheme pension at the NPA this would potentially be a very good way to avoid the actuarial reduction to maximum your pension and the lump sum.

Korkyb

tacpot12 wrote: »

When you go part time, it effectively reduces the rate at which you acquire reckonable service within the scheme (as saucer said above.) The Final Salary amount stays the same when you go part-time, save for any pay increases.



For calculating your pension under the 1995 section, neither is correct! They do use "the last pay reported to us" is used for estimating your 1995 section pension, but not for calculating the pension when it is paid. So if you look at a Pension Forecast on your Total Rewards Statement (TRS), this will use the last pay reported to NHSBSA which will probably 18 months out of date!

When the 1995 section is paid, they look back at every 12 month period from the date you stopped work going back for upto three years to find the highest salary (as saucer said above). So if you stop on 31st July 2019, they will look 1st Aug 2018- 31st July 2019, 1st July 2018 - 30th June 2019, and so on right the way back until 1st Aug 2016-31st July 2017 to find the highest final salary.

I don't know for sure about your unsocial hours, but assuming you are only paid the unsocial rate for the actual hours you work that are unsocial, this will increase the rate at which you earn reckonable service. The increase in rate will be the proportionate to the ratio of social to unsocial hours you work AND the pay increase for the unsocial hours, so it will be difficult to get a precise figure. One way to deal with this is to work part time for four years prior to retiring as this will allow you to see the additional service you are being credited with for unsocial hours as part of your TRS. However, if all the hours you work are unsocial then the increase in reckonable service will only be proportionate to the pay increase for unsocial hours.

Either way, it doesn't alter what is best for your in terms of pension income because they multiply the final salary by reckonable service. So if the credit for unsocial working is given to the final salary, you get less reckonable service, or if the credit for unsocial working is given to reckonable service, you get a lower final salary, but the end result is the same.

If you go part-time at 55 and retire at 59. You will have accrued less reckonable service (due to being part-time) and you final salary will be lower because you will have missed out on a pay rise in the final year, AND you would have the actuarial reduction for taking the pension a year early.

If you have any savings or pensions that would allow you to leave NHS employment before the NPA but claim the 1995 scheme pension at the NPA this would potentially be a very good way to avoid the actuarial reduction to maximum your pension and the lump sum.

Thanks for that.

I do have savings & plan to use that up before taking out my pension.

My wife (2 years younger than me) is in the same line of business & is lucky enough to be in the protected 95 scheme so will be able to take her (smaller) pension at 55 without any actuarial reduction - her lump sum should help stave off the need to take my pension early.

One thing I was wondering about was if it might be worth reducing my hours at 55 then leaving the scheme 3 years later (but not drawing it until I have to) thus locking in my best annual full time salary (as I say I do get an uplift of around 20% over my basic salary because I work so many unsocial hours).