NHS pension

LottieA

Really hoping someone can clear up an issue that the NHS pension people can't. I work part time & have funds in 2 different NHS schemes ( left & came back) When we had back pay almost 2 years ago it took that months pay up to the next % bracket. They carried on taking that % for the rest of the year. The following year I was still on a higher % than I should have been, but knowing how hard it is to speak to anyone I didn't rush, thinking its overpayment into my own funds so I'd leave it. When I did email to check it was all going in my own personal pot I was told yes, but the person said they would check. I've now been told yes it all goes into my own pot, no it goes into a general pot & oh I think its all yours but I'm not sure! This is from the people who work at the NHS pension!! I have tried to do the maths & seem to have paid £1800 more than I calculate I should have,  they have repaid £150. Can anyone give me advice on how the scheme actually works please. Sorry if this is long winded. 
Thanks. 

Dazed_and_C0nfused

I think your biggest problem is that you've misunderstood the basics of how the NHS pension scheme works.

You don't have a pension pot, you will be entitled to a pension under the scheme rules, the amount of the contribution doesn't actually alter that.

For example you might earn say £30,000 and contribute say 10% of your salary so an annual contribution of £3,000.  The real cost of this would often just be £2,400 as you avoid paying tax on that £3,000 (although your salary is £30,000 your taxable pay is only £27,000).

In return the NHS will pay you a pension of £555 😉.

As far as the contribution rate is concerned have you read the scheme rules to see how the change when your pay changes?

Sarahspangles

Did they not direct you to the NHSBSA Pensions website? The percentage we pay has been changing, with more change to come. https://www.nhsbsa.nhs.uk/member-hub/cost-being-scheme 

We don’t have a pot, for service after 2015 it’s a defined benefit scheme with CARE (Career Average Revalued Earnings). Confusingly the members guide uses the term pot to explain how the pension builds up but that’s misleading when people with personal pensions use that same term to talk about a sum of money that goes up and down with changes on the stock market. The only number that matters on our Total Reward Statement is the amount of pension payment we’ve accumulated.

https://www.nhsbsa.nhs.uk/sites/default/files/2015%20Members%20Guide%20%28V11%29%2007.2021.pdf

LottieA

Thanks for the replies. 
I definitely don't understand any of it! 

My contribution changed in Sep '21 when there was a backdated payrise,  but even though my pay didn't change by much they left me in the higher bracket, which I wasn't earning, for the rest of that financial year. 

SBS send meaningless replies & then tell me they've closed the case. I have seen the list of the % changes & I'll watch with interest to see if they get it right 🤞

So.....sorry if I'm being dim, but if I don't have a 'pot' where does the extra I have paid go? Surely I should get it refunded? 🤔

Flugelhorn

LottieA said:

So.....sorry if I'm being dim, but if I don't have a 'pot' where does the extra I have paid go? Surely I should get it refunded? 🤔

ultimately it is just like an extra tax (I think) - I breached a threshold during a  year which took me onto the next band and I ended up paying 14.5% on the whole lot rather than 13.5% - meant nearly £1000 for earning just a few quid over the threshold. Nothing could be done, got no significant increase on the pension and you can be sure I didn't make that mistake again.

having said that, reading the documentation again, I think they should be looking at the annualised pensionable pay and it probably should have gone back down the next month to the proper banding - did it go back down the next financial year?  - Suspect any error is with payroll and not the pensions agency 

Nebulous2

I'm in the Scottish scheme, so there could be some differences, and also work part-time. 

The payment is based on full-time pay for your band, not what you actually earn. 

As an example, in Scotland you pay 7.3% up to £32,914 and 9.5% from £32,915 to £66,017.  Top of Band 5 is now £37,664. If you work part-time as a top band 5, earning £20k, you still pay 9.5% instead of 7.3% because your payment is based on full-time for top band 5. 

I suspect that is what happened, a payrise took your grade over the threshold into the next contribution level. 

Sarahspangles

LottieA said:

Thanks for the replies. 
I definitely don't understand any of it! 

My contribution changed in Sep '21 when there was a backdated payrise,  but even though my pay didn't change by much they left me in the higher bracket, which I wasn't earning, for the rest of that financial year. 

SBS send meaningless replies & then tell me they've closed the case. I have seen the list of the % changes & I'll watch with interest to see if they get it right 🤞

So.....sorry if I'm being dim, but if I don't have a 'pot' where does the extra I have paid go? Surely I should get it refunded? 🤔

I think you’re going to have to post one of the meaningless replies and maybe we can either help you understand it’s right or how to tell them in ways they will understand that it’s wrong…..

If they owe you an overpayment then they’ll pay it back. The NHS pension scheme is unfunded, there is no pot anywhere. There is a sum shown as taken off our pay packet but that never left the Government’s bank account to start with, the only money that actually flows is when our pension is paid. NHSBSA would just reduce your deduction in the month they repay it, and tell the Government the NHS cost a tiny bit more that month. If you find it worrying that there is no pot, well, the state pension runs the same way!

Workerdrone

LottieA said:

Really hoping someone can clear up an issue that the NHS pension people can't. I work part time & have funds in 2 different NHS schemes ( left & came back) When we had back pay almost 2 years ago it took that months pay up to the next % bracket. They carried on taking that % for the rest of the year. The following year I was still on a higher % than I should have been, but knowing how hard it is to speak to anyone I didn't rush, thinking its overpayment into my own funds so I'd leave it. When I did email to check it was all going in my own personal pot I was told yes, but the person said they would check. I've now been told yes it all goes into my own pot, no it goes into a general pot & oh I think its all yours but I'm not sure! This is from the people who work at the NHS pension!! I have tried to do the maths & seem to have paid £1800 more than I calculate I should have,  they have repaid £150. Can anyone give me advice on how the scheme actually works please. Sorry if this is long winded. 
Thanks. 

I absolutely get your point. Just using totally random figures. Say you earn 30k a year and pay 9.3% and accrue £555 in your work TRS for that year. The next year you get some back pay of £10k and end up paying 14.4%. Because they have counted your back pay as being pensionable, it has upped your payment. The only saving grace I can see, is that the pension you earn for that year should be a higher amount than normal. You can check this on the pensionable earnings statement of you total rewards statement on ERA. If your earnings dropped back the next year, so should your contribution %. So in reality your £1800 overpayment isn't really lost. it just meant for one of the years in your pension history, you have more earned pension. That year will pay out more than the others for every year you are in retirement.

There have been a lot of changes to NHS pension contribution amounts. I know there was some hoo had about part time employees getting charges at full time rates which I believe has been sorted.

Pat38493

I don’t know if this has any bearing on the above as it’s not directly mentioned, but my wife had the issue in the NHS that she ended up worse off on a net pay level after getting a pay rise because it triggered a higher tier of percent contributions on the pension scheme.

Moonwolf

It is worth pointing out that there have been an ongoing problems some of which should have been fixed now.

Two that might be relevant here are:-

Firstly part timers pay a contribution rate based on their whole time equivalent salary

Secondly, there were “cliff edges” where pay rises could move people up a contribution band meaning take home pay actually dropped.

This was consulted on here  https://www.gov.uk/government/publications/changes-to-member-contributions-in-the-nhs-pension-scheme/the-national-health-service-pension-schemes-member-contributions-etc-amendment-regulations-2022

I sounds like your issues relate to these problems.  From now on, the plan is that contribution bands move with payrises and it is your pensionable salary that is used to calculate your contribution rate.  The steps have also been reduced so going up a pay band should be less painful.

r6mile

Interestingly, the Civil Service alpha pension scheme doesn’t have the first issue, in that pension contributions are based on actual pensionable salary (not FTE equivalent). 

But the second issue remains - there are only 4 tiers and the bands have been frozen for three years so a nominal pay rise can definitely lead to a net pay cut if you are close to the threshold.