Choice 2Information and actions for employees

Why Choice 2?

A key component of the new 2015 NHS Pension Scheme is a higher normal pension age, equal to member’s state pension age, with pension reduced if a member decides to retire earlier.

Had this information been available at the commencement of the previous Choice exercise, some members may not have elected to remain in the 1995 section.

In the interests of fairness, those affected are being offered another opportunity to move their 1995 section membership to the 2008 section – this is Choice 2

The choice may be advantageous to some members who intend to retire closer to their new NPA because the 2008 Section has a higher build up rate.

Who is eligible for Choice 2?

In the interests of fairness, those affected are being offered another opportunity to move their 1995 section membership

to the 2008 section – this is Choice 2

To be eligible for Choice 2, a member must:

• Be a member of the 1995 section of the current scheme;

• Have tapered protection or no protection.

Eligible members

No protectionTapered

protection

Members of the 1995 section of the current NHS Pension Scheme at TEWV

Approximately 2,500 members=

What is protection?

• Members who were 10 years or less from their normal retirement age at 1 April 2012 have full protection and will not move into the new 2015 scheme.

• Members who were between 10 years and 13 years and 5 months from their normal retirement age at 1 April 2012 will have tapered protection under the new scheme arrangements and will move to the new 2015 scheme at some point after 1 April 2015. The date they move to the new scheme (the length of protection) depends on their age at 1 April 2012.

• Members who were 13 years and 5 months or more from their normal retirement age at 1 April 2012 have no protection and will move to the new 2015 scheme on 1 April 2015.

How Choice 2 is being delivered

• NHS Business Services Authority (NHSBSA) produced personalised letters for each eligible member during November.

• These letters were passed to your manager for distribution, or sent by recorded delivery to your home address.

• Online calculator (https://apps.nhsbsa.nhs.uk/choice/index.html) and worked examples are available to members via the NHS Pensions website.

• An online response form is available on NHS Pensions website (http://www.nhsbsa.nhs.uk/Pensions/4640.aspx), or a hard copy of the form can be obtained via the Choices 2 helpline (0300 123 1601) or by e-mailing nhsbsa.choice2members@nhs.net

.

What do members need to do?

• Read your Choice 2 letter in full to understand the implications for you.

• Make use of the online calculator and examples.

• If a member wants to move their benefits to the 2008 section, they complete the online response form or request a hard copy from the helpline.

• The deadline for NHS Pensions to receive Choice 2 decisions is 16 March 2015.

• Once a member has made a decision it cannot be changed.

• Members who decide not to move do not need to do anything – they will remain in the 1995 section by default.

What else do you need to do?

Additional Resources and Support:

• Choice 2 webpage: http://www.nhsbsa.nhs.uk/Pensions/4640.aspx

• 2015 NHS pension scheme details: NHS Pension Scheme: Arrangements beyond 1 April 2015

• Trust’s pensions InTouch page: http://intouch/Services/Corporate/Finance/Pages/Pensions.aspx

• You can email any queries to pensions@nhsemployers.org

2015 NHS Pension Scheme

• Effective 1 April 2015.

• When you retire you will receive 2 pensions.

• Your existing 1995 benefits will be preserved and calculated on the best of your final 3 years pensionable pay as at when you retire (provided no break of 5 or more years).

• Accrual rate of 1/54th of pensionable pay.

• No automatic lump sum, however you can choose to fund one by reducing annual pension (also known as commutation).

2015 NHS Pension Scheme

• Normal retirement age is equal to members state pension age.

• Is a Career Average Revalued Earning (CARE) scheme.

• Prior years membership will be revalued each year for inflation (currently CPI) + 1.5%.

• An annual pension benefit statement will be made on your total reward statement – please review for accuracy and contact NHS Pensions with any queries.

• Employee contribution levels are to remain unchanged until 31 March 2019, apart from a reduction on the Tier 5 boundary (those paying 12.5%) to £47,846.

2015 NHS Pension Scheme

Year 1 2 3 4

Pensionable Pay 18,000 18,180 18,362 18,545

Pension (1/54) 333 337 340 343

Revalued (0.5% inflation) 340 343 347Revalued (0.5% inflation) 347 350Revalued (0.5% inflation)

354

• Total annual pension if retired at the end of year 4 equals:£354 + £350 + £347 + £343 = £1,394 per annum

• Below example assumes pensionable pay of £18,000 per year, increasing at 1% per annum, and inflation of 0.5% plus 1.5% each year.

2015 NHS Pension Scheme

• There is no MHO status in the 2015 scheme, this ends with the 1995 scheme. Employees with MHO status do not transfer this with them though a Uniform Accrual calculation at retirement may apply.

• You can still retire and claim your 1995 scheme pension at age 60, however; you can then no longer contribute to the 2015 scheme. If you claim your 2015 scheme at aged 60 you will be charged with a benefit reduction.

• You can contribute an additional sum each month to “buy out” years of your pension, meaning you can retire from the 2015 scheme up to 3 years before state pension age without penalty. This facility is known as an Early Retirement Reduction Buy Out (ERRBO).

Related Developments

• An NHS-wide Working Longer Review, in response to the increased NHS normal pension age, is being undertaken.

• Related guidance, training and information for employers and employees is to be produced over the next two years to support changing practice.

• NHS based research is to be undertaken between 2015-17 to address (i) whether there are links between NHS staff working longer and performance at work (ii) what changes to employment policy and practice may be needed to enable staff to safely work for longer and (iii) what the factors are that influence NHS staff retirement decisions.

• The Trust is developing its local approach to successfully employing older workers.