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Scottish NHS: Pensions Update Briefing No.170
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Scottish NHS: Pensions Update Briefing No.170

November 2007

Introduction

This briefing provides an overview of the changes to the NHS Pension Scheme in Scotland. The NHS Pension Scheme Review has been undertaken by the Scottish Pensions Review Group (SPensiR) a partnership between employers, trade unions/professional organisations and the Scottish Government. The group was tasked with developing a sustainable pension scheme fit for the NHS in 21st century Scotland.

Two NHS Pension Schemes

The new arrangements for the NHS Pension Scheme in Scotland will mean that from 1 April 2008 there will be two pension schemes i.e. the current NHS Pension Scheme updated and a new NHS Pension scheme for those joining the scheme for the first time from 1 April 2008. Active members of the current scheme will be given a choice with regard to joining the new scheme in early 2009. In both schemes pension benefits will be based on final salary.

NHS Pension Scheme - updated

The key aspects of the current pension scheme will remain largely unchanged. This includes normal retirement at 60 (55 for Special Classes) while the pension scheme will retain an accrual rate of 1/80ths with a tax free lump sum of 3/80ths. However, there are also some improvements to the scheme including, a new option for members to 'top-up' their lump sum to up to 25% of their total pension fund, partner pensions for eligible unmarried partners and more flexibility in the run up to retirement. Additional changes also include the opportunity to pay into the scheme for a total of 45 years, regardless of age as well as a new option for topping up the pension which replaces added years, while earnings caps will be removed from service from 1 April 2008.

 

New NHS Pension Scheme

For staff who join the pension scheme from the 1st April 2008 onwards, they automatically become members of the new NHS Pension Scheme. This scheme, will remaining a final salary scheme, has some differences with the updated scheme. This includes the normal pension age being set at 65 (with no exemption for Special Classes); no automatic lump sum but able to choose to commute up to 25% of pension fund as lump sum payment; a higher accrual rate of 1/60th; the ability to take part of pension while continuing to work and accruing further pension; and partner pensions for full service. In addition, the final salary will be based on the average of the best 3 years in the last 10 before retirement.

Contributions

How much you contribute will depend on how much you earn (your pensionable pay) or the equivalent amount if you work part time. The contribution rates for both schemes are outlined in the table below. Your contribution rate will depend on your pensionable pay, or the equivalent amount if you work part time. In 2008/2009 your contribution rate will be based on your pensionable earnings for 2007/2008. There is no change to the employer rate which remains at 14.4%.

Annual Pensionable Pay

(Full time equivalent)

Current Contribution

New Contribution

Up to £19,682

5% (manuals) or 6%

5%

£19,683 - £65,002

(Linked to AfC pay point 17)

5% (manuals)

6%

6.5%

£65,003 - £102,499

(Linked to AfC pay point 49)

6%

7.5%

£102,500 plus

6%

8.5%

 

Pension Transfer

Members in the current scheme will be given an option to transfer to the new scheme on the basis that they will take all of their service with them. It is anticipated that a choice exercise will take place early in 2009, at which time all members of the current scheme will be provided with sufficient information in order to make an informed decision. It should be noted however that neither the SPPA nor NHS employers are permitted under law to give financial advice. Members with deferred benefits in the current scheme who return to NHS employment on or before 30th September 2008 will rejoin the current scheme as amended. Those returning from 1st October 2008 after a break in their NHS employment of less than 5 years will also be able to choose to remain in the current scheme.

Ill Health Consultation

A separate but parallel review of ill health retirement has also been taking place, again in partnership with SPensiR.

Agreement has now been reached on reform of ill health retirement and consultation commenced on 24th October 2007. The consultation document and response forms are available from the NHS pension reform pages fo the SPPA website at http://www.sppa.gov.uk/pension_reform/nhs.htm. The closing date for completed responses and comments is Friday 14th December 2007.

Action for Branches

This briefing paper is intended to update members on changes to the NHS Pension Scheme and to inform them of a consultation on ill health retirement.

UNISON Scotland will be submitting a response to the consultation on ill health retirement and would encourage members to forward any relevant information they may have to the P&I Team as part of this response.

Further Information

UNISON Scotland

http://www.unison-scotland.org.uk

SPPA NHS Pension Reforms

http://www.sppa.gov.uk/pension_reform/nhs.htm

Contacts list:

Willie Duffy

w.duffy@unison.co.uk

Kenny MacLaren

k.maclaren@unison.co.uk

Dave Watson

d.watson@unison.co.uk

@ the P&I Team

14 West Campbell St

Glasgow G26RX

Tel 0141-332 0006

Fax 0141-307 2572

 

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Further Information

UNISON Scotland
http://www.unison-scotland.org.uk

SPPA NHS Pension Reforms
http://www.sppa.gov.uk/
pension_reform/nhs.htm

Contacts list:

Willie Duffy
w.duffy@unison.co.uk

Kenny MacLaren
k.maclaren@unison.co.uk

Dave Watson
d.watson@unison.co.uk

@ The P&I Team
14 West Campbell St
Glasgow G26RX
Tel 0845 355 0845
Fax 0141-307 2572