New 2015 Pension Scheme

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5 / 3 / 2015 00:00 AM

From 1 April 2015 there will be a new NHS Pension Scheme.

Below you will find a summary of the new arrangements. The scheme design has been carried out in line with the principles outlined in the proposed final agreement

Career Average Revalued Earnings (CARE) scheme
Membership
Member contribution rates
Employer contribution rate
Scheme flexibilities
Transfers in and out
Breaks in service
 

Career Average Revalued Earnings (CARE) scheme - 

  • 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.
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 organisation, 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 or 2008 sections
  • not in receipt of pension benefits from the 1995 section (there are a few exceptions).
Member contribution rates - 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 and 2008 sections as well as the new 2015 scheme. For a full table of the rates please see our contributions webpage.
 Tier Pensionable pay   Contribution rate
 4  £26,824.00 to £47,845.99  9.3%
 5  £47,846.00 to £70,630.99
 12.5%

Employer contribution rate - The employer contribution rate will increase by 0.3 per cent to 14.3 per cent from 1 April 2015. You can find out more on our contributions webpage. 

Scheme flexibilities - The new 2015 scheme will have the same flexibilities as the 2008 section of the current scheme alongside a new provision; Early Retirement Reduction Buyout. Taking benefits before NPA results in them being reduced for early payment. Members or employers can pay additional contributions (Early Retirement Reduction Buyout) 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.

Transfers in and out - 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 sections -

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 new 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 new 2015 scheme on 1 April 2015.

Salary Sacrifice

The introduction of the 2015 NHS Pension 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.

Resources to support you

We have produced a range of materials to support employers through the transition to the new arrangements:

Comparison with the existing scheme

NHS Pensions has published a useful comparison of the features and benefits of the existing 1995 and 2008 sections of the NHS Pension Scheme and the new 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.

If you would like more information please email pensions@nhsemployers.org.

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