1995 NHS Pension Advice

ManMadeWays · 17 June 2018 at 11:10PM

Hello, long time lurker now signed up ! Hope to offer advice in future but starting with a request for advice

My wife is in the NHS 1995 Pension Scheme as a Special Class member working Part Time (0.5WTE)

She intends to retire at 55 next year, draw pension, and carry on working.

Having checked the rules, it appears she would suffer abatement of her full pension, as post retirement earnings plus pension will exceed pre retirement earnings by the value of the pension, that would then be abated by 100% ie total pension lost (until 60).

I have advised her to go back to full time for the year before retirement so that when the comparison is done it is comparing Full Time with part time pay plus pension and that will not exceed the full time pay.

Also an extra 0.5/80th to boost pension slightly.

Have I advised correctly ? Thanks in advance

Also a bonus question please.

She was down graded a few years ago (band 7 to band 6) and pay at the point will be used for the pensionable service to date. I assume it will be indexed by inflation ? RPI/CPI ? but I cannot find clear advice.

Does any one know or point me in the right direction on this point ... Thanks in advance

crv1963 · 18 June 2018 at 7:29AM

Hi ManMadeWays

There are a couple of flaws in the working out above, how many years part time? At what grade? How many years at band 7? Was the downgrade with protected salary for a time?

As part time staff earn pension at a pro-rata rate. The pension is calculated on the best of the last 3 years earnings in the 1995 scheme, but for each part time year worked it will be less so 5 years in a 0.5 post earns 2.5 years pension rights.

Your wife should ask to have a pension forecast from the Pension Agency and an appointment with her Trust pension officer who would tell her the best way to increase it.

If planning on taking pension then working in the same role why not just carry on working (full or part time) and earn extra pension rights? For instance every full year from age 55 in a post earns an extra 2/80 pension so the best way to maximise pension rights in the 1995 scheme is full time to age 58. After reaching 45/80 she cannot build anymore pension rights.

Hope this helps.

Edit- If she doesn't want to increase hours in her substantive post she can work bank shifts as they will be pensionable for her as she can pay pension contributions up to full time hours over the year .

ManMadeWays · 18 June 2018 at 8:09AM

Hello crv1963,

Part time working now for circa 25 years of children, Fulltime prior to that.

At retirement, assuming part time for another year, 24.1 WTE split 19.6 pre downgrade 4.5 post downgrade.

Yes, there was pay protection (7 years) that brings £3k into the 'best of 3 years' for the last 4.5 year service portion, this will drop out the time frame if she retires beyond 55. (actually this is not a lot of money (4.5/80*£3,000*2 = £338 pa)

We have a pension forecast from Total Rewards Statement based on 16/17 earnings only, it does not take into account the pay at downgrade situation. In a months time we will ask for an accurate forecast (within a year of retirement it's free)

I didn't know that working beyond 55 earned 2/80'ths pension, did you mean 1/80 ?

I'm not sure it is advantageous to work another year and not take the pension and work part time, she is reluctant to go back full time even for a year anyway.

I'll ask her to find a Pensions Officer to discuss,

Do you know the rules on indexing the earnings prior to downgrade ? is it RPI ? Thanks for your input

mollycat · 18 June 2018 at 9:50AM

MMW, the logic within the OP looks goods to me. (with regards to avoiding the abatement).

Think CRV1963 maybe assuming your wife has MHO status when he says 2/80ths after 55 years; it doesn't say in the opening post, just that she has Special Class status.

With regard to the protection, my OH is in the same boat, we will be seeking to protect 2015-2016 pay. All of the literature i've seen refers to "increases in line with cost of living expenses" but it's not clear if they use CPI, RPI or a formulae of their own.

NHS Tayside does not have a pensions officer so am embroiled in a debate with SPPA over OH's entitlement.....39 years 243 days actual service, (the maximum allowed at 55 is 40 years), but they are saying it is correct to subtract 1 year off of that as she has greater than 40 years calendar service.

Worked all full time bar final year, struggling to work out how anyone with part time working can possibly accrue 40/80ths under this arrangement?

I think that this cannot be correct; this years statement when produce will show in excess of 39 years actual service, 6 months later when she retires she will have almost 1 year less service!

ps Sorry to highjack your thread

ManMadeWays · 18 June 2018 at 10:56AM

Hello mollycat,

you are welcome to join the thread.

My wife is a Midwife not a MHO, MHO do get double service I think.

This is what I picked up about the protection but still don't quite understand it.

How pension benefits are calculated if an application to protect pay is accepted
If a member has one period of pay protection when they retire, two pensions will be calculated. A
pension based on the protected rate of pay* plus cost of living increases for membership up to the
date of protection, and a second pension for membership after that date which will be calculated
on their pay* at retirement.
If by retirement the protected pay plus cost of living increases is not more beneficial, then the
whole of their 1995/2008 Scheme pension benefits will be calculated using pay* at retirement.
*1995 Section membership - The best of the last three years of pensionable pay.
*2008 Section membership - The reckonable pay, which is an average of the best three
consecutive years!!!8217; pensionable pay in the last 10 years.

Sorry to hear of you struggles with OH , max is 40/80 , part time for last year would make it 39.5/80 surely ??

Glad you concur on avoiding abatement

Thanks for your input

mollycat · 18 June 2018 at 11:21AM

Thanks for that, yep the calculations used for the protected year to then compare against any other year of the last 3 years seem vague in any literature I've been able to find.

Regards my difficulty, 30 years as a MHO gives 40 years calendar service.

Unless you start and finish on your birthday everyone is going to accumulate more than 40 years calendar; to then subtract the extra calendar, (in OH case 1 year and 1 day) from her actual service of 39 years and 200+ days to give 38 years 200+ days seems bonkers.

If she then works longer and accrues (say) another year at 0.6wte, then that would be another full calendar year to be subtracted from her actual service presumably.

I will continue our discussion with SPPA unless someone who knows better comes by and puts me right!

getmore4less · 19 June 2018 at 7:36AM

IT has been a while since I got involved with 1995, but one thing to consider is the exact month of retirement and the pay in the best 12 month of the last 36.

The easiest way to boost a 1995 pension is to only do hours with enhancements.

in the last 3 years try to get at least a 12 month period that has max enhanced pay each month then retire to make that the chosen 12 months.
I did a spread sheet with a rolling 12 month to see where the peak was)

One thing to check is the abatement is that based on ACTUAL earnings or FTE/annual salary for a part timer, something in my head says FTE/annual
This was a few years back but I recall the pension was say around 50% of annual salary(working part time 0.5) and that going back part time 0.5 would be OK subject to variations due to enhanced rates.

In the end my OH went Bank as she knew they used it all the time.
This allowed her to pick her shifts and just not work when she wanted, for a holiday or it looked like snow.

One other thing is make sure there is at least a month gap before going back avoids any suspension rules when retiring early.

getmore4less · 19 June 2018 at 8:35AM

edit: the Copy/paste not so good but you can read the actual text in the link.

found it..... this is the real legislation for the 1995 scheme.

starting at the relevant section.

https://www.legislation.gov.uk/uksi/1995/300/part/S/made

read it all, I have marked in bold below what I think are the most relevant bits.

Reduction of pension on return to NHS employment

S2.!!!8212;(1) This regulation applies, until he reaches age 60, to a member in respect of whom a pension is payable under any of regulations E1 to E5 or L1, who continues in, or subsequently returns to, NHS employment.

(2) A member to whom this regulation applies must inform his employer, and any other person that the Secretary of State may specify, that his pension under the scheme has become payable.

(3) Where this regulation applies, the member!!!8217;s pension will be reduced to the extent necessary to ensure that the member!!!8217;s pension plus pay from NHS employment for any financial year after the pension becomes payable does not exceed the member!!!8217;s previous pay.

(4) A member!!!8217;s pension will be reduced as described in this regulation whether or not the member is included in the scheme in respect of the employment after his pension becomes payable and regardless of any provision of these Regulations under which a member may be treated as having left NHS employment without actually leaving.

(5) For the purposes of paragraph (3), the amount to be taken as the member!!!8217;s previous pay shall!!!8212;

(a)be increased in each financial year by the amount by which a pension beginning on the date on which the member!!!8217;s pension under the scheme became payable (or, if earlier, the member left pensionable employment) would have been increased under Part I of the Pensions (Increase) Act 1971 at the 6th April falling in that financial year;

(b)in the case of a person who holds a continuing employment (otherwise than as a practitioner), be increased by the annual rate of pay in respect of the continuing employment; and

(c)in the case of a person who is employed as a practitioner in continuing employment, be increased by the average of the annual amounts of uprated earnings in respect of the last 3 financial years prior to the pension referred to in paragraph (1) becoming payable.

(6) For the purpose of calculating the reduction to be made under paragraph (3) in respect of any part of a financial year, the amount of the member!!!8217;s !!!8220;previous pay!!!8221; will be reduced proportionately.

(7) This paragraph applies to a person who held a part!!!8211;time pensionable employment immediately before the pension described in paragraph (1) became payable and who, within the 12 months preceding the date on which the pension became payable, held a concurrent part!!!8211;time pensionable employment.

(8) Where paragraph (7) applies and the concurrent part!!!8211;time pensionable employment terminated before the pension described in paragraph (1) became payable, previous pay shall be increased as described in paragraph (9).

(9) For the purpose of paragraph (8), previous pay shall be increased by the annual rate of pay in respect of the concurrent part!!!8211;time employment mentioned in that paragraph or, if higher, that part of the pensionable pay for that employment which falls within the 12 month period mentioned in paragraph (7).

(10) This paragraph applies to a person who within the 12 months preceding the date on which the pension described in paragraph (1) became payable, was in pensionable employment as a practitioner.

(11) Where paragraph (10) applies and the pensionable employment as a practitioner terminated before the pension described in paragraph (1) became payable, previous pay shall be increased as described in paragraph (12).

(12) For the purpose of paragraph (11), previous pay shall be increased by the average of the annual amounts of the member!!!8217;s uprated earnings in respect of the pensionable employment as a practitioner mentioned in that paragraph.

(13) For the purpose of paragraph (11), !!!8220;uprated earnings!!!8221; means the same as in paragraph 11(2) of Schedule 2.

(14) For the purposes of this regulation!!!8212;

!!!8220;annual rate of pay!!!8221; means the annual rate of so much of the member!!!8217;s pensionable pay immediately before his pension became payable as consisted of salary, wages or other regular payments of a fixed nature plus so much of his pensionable pay as consisted of fees and other regular payments not of a fixed nature as was payable during the last year before his pension became payable;
!!!8220;continuing employment!!!8221; means a pensionable employment which a person held immediately before he became entitled to a pension under the scheme and which he continues to hold whether it is pensionable or not;
!!!8220;NHS employment!!!8221; has the same meaning as in regulation S1(5);
!!!8220;pension!!!8221; means the amount of pension paid under the scheme for any financial year, plus any increases to that pension payable under Part I of the Pensions (Increase) Act 1971 for that period;
!!!8220;pay!!!8221; means the amount of pensionable pay received by the member during that financial year from NHS employment (or what would have been his pensionable pay had he been in pensionable employment); and
!!!8220;previous!!!8221; pay means, the greater of!!!8212;
(a)final year!!!8217;s pensionable pay; and
(b)the annual rate of pay for any pensionable employment in respect of which the pension referred to in paragraph (1) became payable and which the member held immediately before becoming entitled to that pension.

The key being for part timers the annual rate for the grade applies not the acutal pay

ManMadeWays · 19 June 2018 at 11:55PM

Thanks, I have now read the legislation several times. I think the annual rate referred to covers someone who only worked for a few months in the year ? I cannot see any reference in the legislation referring to adjusting from say 0.5WTE to 1.0 WTE. Also alarmingly I cannot find a reference to inflation on a 'preserved' pension as they call it. Hmmm. Well, my wife is now full time from August so I'll be in the doghouse if I was wrong about her going back full time

. At least it brings in a bit more cash and adds a 0.5 /80th to the pension....... :T

getmore4less · 20 June 2018 at 5:39AM

I don't think you have read/understood it properly.

Summary, the previous pay uses for the abatement is the annual salary or if you earned more in the year(most do if full time) you count the larger amount.

6) For the purpose of calculating the reduction to be made under paragraph (3) in respect of any part of a financial year, the amount of the member!!!8217;s !!!8220;previous pay!!!8221; will be reduced proportionately.

that paragraph applies to the first year and last year of the abatement period, it will be prorata for the part years.

7,8,9 are for those that had a second part time job, again it is full salary or actual pay if higher that gets added.

1995 NHS Pension Advice

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