Calculating Annual Allowance for NHS 1995 and 2015

furpho

Hi..  anybody know how to calculate annual allowance for somebody who is in 1995 and 2015 nhs pensions?   I'm informed that both have to be calculated but how do I do that? I know how to do an individual one and there's a great calculator here Defined Benefit Pension input amount tool but how do i combine 2?  And how do i calculate the 1995 pension if it isn't current?  

Dazed_and_C0nfused

furpho said:

Hi..  anybody know how to calculate annual allowance for somebody who is in 1995 and 2015 nhs pensions?   I'm informed that both have to be calculated but how do I do that? I know how to do an individual one and there's a great calculator here Defined Benefit Pension input amount tool but how do i combine 2?  And how do i calculate the 1995 pension if it isn't current?  

AA isn't my strong point but isn't it two calculations, the results of which are added together to give you the AA used (assuming no other pensions to be taken into account).

And isn't the 1995 scheme still "current" in that it has a final salary link so current salary is relevant and the pension accrued could be increasing whilst in still service.  As opposed to having an annual inflation increase like a deferred pension would have.

Moonwolf

Assuming your 1995 is not deferred (mine is and only grows by inflation so can be ignored). 

However, if your pension is still linked to final salary, in years when you have a payrise above inflation then it might have an impact.  That calculator won't work as it will assume you are adding 80ths.  What you need to do is work  out the increase in the value of your pension and subtract the inflation increase.

For example, lets say you have 20 years in the 1995 so 20 80ths or 1/4.  Your pay was £40,000 and inflation is 2% but your pay goes up to £44,000 either because of pay points or a catch-up payrise.  Your 1995 pension will rse from £10k a year to £11k a year but the inflation rise is 2% so anything over £10,200 will add to your annual allowance, the difference then is 16 x £800 or £12,800 which you need to add to any other growth in other pensions.

Edit: I missed off the lump sum (3x pension for 1995) so there is £2,400 to add to that.

This note helps decide on the impact Annual Allowance-Does it affect me (04.0217) V2.pdf

There are some resources here Annual allowance | NHSBSA