How many days are there in a pension year?

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
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When I transferred my pension into the NHS scheme I was told I had X years + 339 days. How do they work this out? I'm trying to calculate how many years I have in my pension pot. I know I can ask the NHSPA but since I started thinking about it I'm curious. Does anyone know?

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  • Hi.

    A final salary scheme will generally give something like 1/60 or 1/80 of your final pensionable salary for each complete year of service. However different pension schemes will have have different ways of treating partial years of service.

    The most common I've seen is complete months (so, say, for 2 years and 75 days of service, this will give you 2 years and 2 complete months, so a pension based on "two years and two twelfths of a year"), although sometimes you do get total number of days (such as your scheme) or even just complete years only. The definition will be in the scheme's rules.

    When it comes to your transfer in, an actuary or actuarial student (probably somewhere in the government actuary department) would have seen how big your lump sum was at the date of transfer in, then worked out to what that was likely to grow to at the time of your retirement, given the expected return on the rest of the scheme's assets - he or she might have worked out this "expected return" in a different way, according to how the scheme deals with transfers in.

    Then the actuarial person would have worked out the pension this is likely to enable the scheme to pay for, given whether you're a man or woman etc. This future extra pension is related to your estimated final pensionable salary, given however many years of future salary increases you're likely to get, and the extra added period of service.

    So, the actuarial person then takes off all the future years of salary increases and can get the number of extra added days and years you will receive.

    Now, there are sometimes special rules for transfers between different government pensions (I've only had to deal with one case over the last 3 years), but the principle will remain the same.

    I hope that's some help.
    I am a trainee actuary, and really enjoy talking about pensions, economics and my job. But I suppose I should point out that all replies are for information or discussion only, and shouldn't be taken as advice: everyone's circumstances and pension schemes will be different.
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