NHS Pension Remedy Period Confusion

Rheumatoid

Just has a look at my wife's NHS Total Reward Statement as she approaches retirement. Even though she opted not to join the 2015 scheme she has benefit statements for the 1995 and 2015 schemes. I understand this is due to legislation regarding age discrimination and all staff have been placed in the 2015 scheme since 1/4/2022. She will then be offered choices of how to take her benefits when she retires.

What I don't understand though is on her statements the 1995 section is updated to 31/5/2018 and the 2015 scheme starts 1/6/2018. What is the significance of this 2018 date? She has had no breaks in service or job change. Why is the changeover not 1/4/2015?

Thanks 

hyubh

Rheumatoid said:

Just has a look at my wife's NHS Total Reward Statement as she approaches retirement. Even though she opted not to join the 2015 scheme she has benefit statements for the 1995 and 2015 schemes. I understand this is due to legislation regarding age discrimination and all staff have been placed in the 2015 scheme since 1/4/2022. She will then be offered choices of how to take her benefits when she retires.

What I don't understand though is on her statements the 1995 section is updated to 31/5/2018 and the 2015 scheme starts 1/6/2018. What is the significance of this 2018 date? She has had no breaks in service or job change. Why is the changeover not 1/4/2015?

Thanks 

In the main, members of the 1995 or 2008 schemes moved into the 2015 one not by choice. On the introduction of the CARE scheme in 2015, anyone a member on 1 April 2012 within 10 years of their old scheme NPA stayed in that scheme, otherwise a 'tapered protection' rule applied in which you were moved into the CARE scheme at some point from 1 April 2015. In your wife's case, it would seem she just under 12 years from her 1995 scheme NPA in 2012, so was moved into the 2015 scheme in 2018 (each month short of your old scheme NPA on 1 April 2022 brought forward a transfer into the 2015 scheme by two months).

Her benefit statements to date, then, reflect not the McCloud remedy, but the situation pre-remedy. As you allude to however, post-remedy, she will have the choice on retirement of whether to have 1995 or 2015 scheme benefits for the period before April 2022.

Rheumatoid

hyubh said:

Rheumatoid said:

Just has a look at my wife's NHS Total Reward Statement as she approaches retirement. Even though she opted not to join the 2015 scheme she has benefit statements for the 1995 and 2015 schemes. I understand this is due to legislation regarding age discrimination and all staff have been placed in the 2015 scheme since 1/4/2022. She will then be offered choices of how to take her benefits when she retires.

What I don't understand though is on her statements the 1995 section is updated to 31/5/2018 and the 2015 scheme starts 1/6/2018. What is the significance of this 2018 date? She has had no breaks in service or job change. Why is the changeover not 1/4/2015?

Thanks 

In the main, members of the 1995 or 2008 schemes moved into the 2015 one not by choice. On the introduction of the CARE scheme in 2015, anyone a member on 1 April 2012 within 10 years of their old scheme NPA stayed in that scheme, otherwise a 'tapered protection' rule applied in which you were moved into the CARE scheme at some point from 1 April 2015. In your wife's case, it would seem she just under 12 years from her 1995 scheme NPA in 2012, so was moved into the 2015 scheme in 2018 (each month short of your old scheme NPA on 1 April 2022 brought forward a transfer into the 2015 scheme by two months).

Her benefit statements to date, then, reflect not the McCloud remedy, but the situation pre-remedy. As you allude to however, post-remedy, she will have the choice on retirement of whether to have 1995 or 2015 scheme benefits for the period before April 2022.

Thanks, very helpful but she was definitely given the choice to remain in the old scheme and we opted for that. So how come, irrespective of McCloud, she was moved over in 2018?

If she will only be able to opt for pre April 22 benefits to be taken in the 1995 scheme at age 60, what happens to post April 22 - will she have to wait until she is 67 to take these?

GrubbyGirl_2

Rheumatoid said:

Thanks, very helpful but she was definitely given the choice to remain in the old scheme and we opted for that. So how come, irrespective of McCloud, she was moved over in 2018?

If she will only be able to opt for pre April 22 benefits to be taken in the 1995 scheme at age 60, what happens to post April 22 - will she have to wait until she is 67 to take these?

They aren't showing it on the statement as it is an option for when she retires.  She may want to stay in the 2015 as it may prove more beneficial the longer she works.  When she wants to retire she will be given both calculations to choose from.  If she wants to retire at 60 she will be able to convert the time in the 2015 back to the 1995 scheme up until April 2022.  The remainder in the 2015 scheme will be frozen until she is 65 or whatever age is her retirement.  If she wants to work until she's 65 she may find she's better off keeping the time in the 2015 scheme as each year pays 1/60th of average salary compared to 1/80th of final salary.  Maybe in future they will show both calculations on the TRS

hyubh

Rheumatoid said:

Thanks, very helpful but she was definitely given the choice to remain in the old scheme and we opted for that. So how come, irrespective of McCloud, she was moved over in 2018?

If she was just under 12 years from her normal pension age on 1 April 2012, the only choice would have been to move into the 2015 scheme ahead of time rather than leaving it to 2018.

If she will only be able to opt for pre April 22 benefits to be taken in the 1995 scheme at age 60, what happens to post April 22 - will she have to wait until she is 67 to take these?

She will be able to leave her 2015 scheme benefits until SPA if she wants, otherwise draw them at the same time with an actuarial reduction.

nigelbb

GrubbyGirl_2 said:

Rheumatoid said:

Thanks, very helpful but she was definitely given the choice to remain in the old scheme and we opted for that. So how come, irrespective of McCloud, she was moved over in 2018?

If she will only be able to opt for pre April 22 benefits to be taken in the 1995 scheme at age 60, what happens to post April 22 - will she have to wait until she is 67 to take these?

They aren't showing it on the statement as it is an option for when she retires.  She may want to stay in the 2015 as it may prove more beneficial the longer she works.  When she wants to retire she will be given both calculations to choose from.  If she wants to retire at 60 she will be able to convert the time in the 2015 back to the 1995 scheme up until April 2022.  The remainder in the 2015 scheme will be frozen until she is 65 or whatever age is her retirement.  If she wants to work until she's 65 she may find she's better off keeping the time in the 2015 scheme as each year pays 1/60th of average salary compared to 1/80th of final salary.  Maybe in future they will show both calculations on the TRS

NHS Pension under the 2015 scheme accumulates at 1/54th of actual salary.

Rheumatoid

Thanks all. She is retiring later this year and will take pension in Feb 2024 (age 60 and NPA for 1995 scheme). We will then look at the options and calculations provided and whether it is better to take her post April 2022 2015 benefits early (NPA 67) with an actuarial reduction or leave them sitting there until she is 67.

jeelz

If (God forbid!) we end up in September with another double-digit inflation figure she may be better waiting till April 24 when the inflationary uplift is applied, to take her 95 pension. Because the 95 scheme has a lump sum of 3 times the annual pension. 

This year, for example,the increase in the lump sum due to inflation will be worth more than three and a half months worth of pension. And it’s tax free.

Rheumatoid

jeelz said:

If (God forbid!) we end up in September with another double-digit inflation figure she may be better waiting till April 24 when the inflationary uplift is applied, to take her 95 pension. Because the 95 scheme has a lump sum of 3 times the annual pension. 

This year, for example,the increase in the lump sum due to inflation will be worth more than three and a half months worth of pension. And it’s tax free.

I understood the 1995 scheme is effectively a final salary scheme so will depend more on her pay rises than any inflation linked uplift - so is not likely to be double digit. Is it not the case that it is only once a pension is taken that it benefits from an annual inflationary uplift (or does at the moment!).

saucer

Rheumatoid said:

jeelz said:

If (God forbid!) we end up in September with another double-digit inflation figure she may be better waiting till April 24 when the inflationary uplift is applied, to take her 95 pension. Because the 95 scheme has a lump sum of 3 times the annual pension. 

This year, for example,the increase in the lump sum due to inflation will be worth more than three and a half months worth of pension. And it’s tax free.

I understood the 1995 scheme is effectively a final salary scheme so will depend more on her pay rises than any inflation linked uplift - so is not likely to be double digit. Is it not the case that it is only once a pension is taken that it benefits from an annual inflationary uplift (or does at the moment!).

Yes, you are right. Inflation is only directly relevant for the 2015 CARE pension before retirement (which is uplifted by CPI). As you say the 1995 is based on final salary which we know very well is NOT rising with inflation, hence the strikes. 

GrubbyGirl_2

jeelz said:

If (God forbid!) we end up in September with another double-digit inflation figure she may be better waiting till April 24 when the inflationary uplift is applied, to take her 95 pension. Because the 95 scheme has a lump sum of 3 times the annual pension. 

This year, for example,the increase in the lump sum due to inflation will be worth more than three and a half months worth of pension. And it’s tax free.

That's not correct for the 1995 section.  You don't get any uplift to your pension until you've taken it. so if your retire in April you will get your final salary divided by 80 and multiplied by the number of years membership.  The lump sum is 3 times the annual pension.  You do not get an uplift until April 2024.  If you retired at the end of February, the pension is the same but you will get a slight uplift for the month you will be taking the pension before the new financial year so for 2023/24 it will be 10.1% divided by 12 (0.84%)..

The only way to get an increase to your 1995 scheme pension is to carry on working and see if your get a decent pay rise