01 / 4 / 2015 Midnight
From 1 April 2015 there is a new NHS Pension Scheme, the 2015 Scheme. This scheme has different features to the existing 1995/2008 Scheme and a summary is available below. The scheme design was carried out in line with the principles outlined in the proposed final agreement.
Support and guidance:
Career Average Revalued Earnings (CARE) scheme
Transfers in and out
- defined benefit scheme which pays a pension based on the average of a member's pensionable earnings throughout their whole career
- revaluation of active members benefits in line with the Consumer Price Index plus 1.5 per cent per annum
- Normal Pension Age (NPA) at which benefits can be claimed, without reduction for early payment, will be linked to the same age as a member is entitled to claim their state pension
- no limit on the number of years pension you can build up
- final pension calculated by adding together all of the revalued pension earned in each year of membership.
All health service workers who are employed by any of the following and who meet the criteria below, are
entitled to scheme membership; NHS organisations,
Direction Body, New Fair Deal employer, approved medical/dental contractors or medical/dental practitioners and are:
- aged between 16 and 75
- not entitled to continue membership of the 1995/2008 Scheme
- not in receipt of pension benefits from the 1995 section (there are a few exceptions).
The member contribution rates are the same as the current 2014/15 scheme year contribution rates except for a small adjustment to the tier 4/5 boundary (as shown below). The rates will remain in place for four years from 1 April 2015 to 31 March 2019 and will be payable by all members of the 1995/2008 Scheme as well as the 2015 Scheme. For a full table of the rates please see our contributions webpage.
|| Contribution rate
|| £26,824.00 to £47,845.99
|| £47,846.00 to £70,630.99
The employer contribution rate increased by 0.3 per cent to 14.3 per cent from 1 April 2015.
The 2015 Scheme will have the same flexibilities as the 2008 section alongside a new provision; Early Retirement Reduction Buyout (ERRBO). Taking benefits before NPA results in them being reduced for early payment. Members or employers can pay additional contributions to eliminate or lower the amount of reduction that would apply. This is restricted to a maximum of three years before the member reaches their NPA. Read more in our flexible retirement hub.
From 1 April 2015 a transfer out to a Defined Contribution (DC) pension scheme, such as a personal pension, will not be allowed. Transfers into the 2015 Scheme will usually be treated as a monetary amount of pension credit and will be subject to in scheme revaluation.
Breaks in service
Periods of membership can be linked providing there is not a break of more than five years. If there is a break of more than five years the pension earned up to the start of the break becomes deferred. At retirement, these benefits are revalued by adding a pensions increase which currently is calculated as Consumer Price Index (CPI) only which means it will be less than an in scheme revaluation (CPI + 1.5 per cent).
Protection arrangements for members of the 1995/2008 Scheme
Full protection – members who were within 10 years of their NPA as at 1 April 2012 will remain in their current section until they retire or otherwise leave the scheme and will not automatically move to the 2015 Scheme.
Tapered protection – members who were more than 10 years, but less than 13 years and 5 months from their NPA as at 1 April 2012 are entitled to tapered protection. This means they will move to the 2015 Scheme at a date later than 1 April 2015.
No protection – members who, as at 1 April 2012, were more than 13 years and 5 months from their NPA have no protection and will move to the 2015 Scheme on 1 April 2015.
The 2015 Scheme has important implications for members with salary sacrifice arrangements and those considering them in the future. Employers need to review how staff with these arrangements are informed of the implications. They also need to update relevant policies and processes. Read more about the importance of these changes on our salary sacrifice webpage
NHS Pensions has published a useful comparison of the features and benefits of the 1995/2008 Scheme and the 2015 NHS Pension Scheme. The comparison includes information on the age at which members can retire and differences in how the pension and lump sum are calculated at retirement. The document is available to view on the NHS Pensions website.