Now that we have looked at the main features of the 1995/2008 Sections along with an introduction to the new 2015 NHS Pension Scheme, let us explore some of the main differences between new and old.
The new NHS Pension Scheme will begin on 1st April 2015. Apart from those with protection, active membership in the 1995 and 2008 Sections will cease. Here is a brief comparison of the features of the new 2015 NHS Pension Scheme and the old 1995 and 2008 Sections.
Pension Build Up
A key difference between the 1995, 2008 and 2015 NHS Pension Schemes is the way benefits are calculated for officer members. With the exception of GPs, existing sections calculate pension benefits by reference to the members' final salary and the length of pensionable service. The new Scheme will instead use a career average revalued earnings (CARE) method rather than final salary. GPs of both the 1995 and 2008 Sections already accrue their pension rights under a CARE basis, but this will be different under the 2015 Scheme.
Benefits in the 2015 Scheme will build up at the rate of 1/54th of pensionable earnings in each year of active membership. At the end of each scheme year (31st March) the amount in an active member's account is then revalued, in line with CPI + 1.5%. Deferred members wil have their accrued rights revalued in line with CPI only.
Indexation of pensions in payment wil remain in line with CPI.
Under the 1995 Section the build up rate is 1/80th of final pensionable pay per year of service. Under the 2008 Section the build up rate is 1/60th of final pensionable pay per year of service.
Under both the 1995 and 2008 Sections, pensionable service is limited to 45 years. However under the 2015 Scheme pensionable service is not capped. Active membership of all schemes is currently subject to an upper age limit of 75.
Normal Pension Age
Your Normal Pension Age (NPA) is the age at which you can retire and draw your benefits in full. Under the 2015 Scheme your NPA is the same as your State Pension Age. However under the 1995 and 2008 Sections the NPA is 60 and 65 respectively.
The 2015 Scheme, like the 2008 Section will contain features allowing for a flexible retirement. For example:
- Wind down; where members can opt to work fewer days or hours in their current post rather than retiring completely
- Step down; which allows members to move into a less demanding and lower graded post
- Draw down; which allows members to take part of their pension benefits whilst continuing in NHS employment
Ill- Health Benefits
Ill health retirement rules will largely follow the ill-health retirement arrangements in the existing sections.
There remains two 'tiers' of ill-health pension:
- Tier 1 is met where the scheme is satisfied that the member is ill with the result being the member is permanently incapable of performing the duties of their current employment.
- Tier 2 is met where, additionally, the scheme is also satisfied that the member is permanently incapable of performing any employment of like duration.
A member of the 1995 or 2008 Section in receipt of Tier 2 ill-health pension cannot accrue further NHS pension rights through additional NHS employment. In addition, their pension may reduce to a Tier 1 ill health pension if any new earnings are higher than the lower earnings limit for National Insurance purposes, or if they return to NHS employment for more than one year - this will remain the case in the 2015 Scheme.
A member in receipt of a Tier 1 ill-health pension can accrue additional pension NHS pension rights through further NHS employment under 2008 Section and the 2015 Scheme, however their pension may be abated.
The assessment of whether the effect of the members' ill-health is 'permanent' uses the member's NPA.
Where a member retires due to ill-health in the 2015 Scheme, the age to be used in determining the extent of prospective service for the Tier 2 pension enhancement and ill health 'permanence' is the member's prospective State Pension Age.
Tier 2 pensions in the 2015 Scheme will include an enhancement equivalent to half of the 'prospective service' to NPA. In the 1995 and 2008 Sections the enhancement is 2/3rds of hte prospective service to NPA.