NHS Pension Scheme Benefits
The NHS Pension Scheme currently has 1.35 million actively contributing members, 560,000 members with preserved benefits and pays pensions to over 660,000 pensioners every month. As such it is the largest pension scheme in Europe.
The NHS Pension Scheme is a defined benefits 'final salary' scheme and is one of the most important and valuable benefits available to NHS employees. The NHS Pension Scheme not only provides you with a regular income after you retire, but it can also provide a lump sum. The NHS Pension scheme also gives financial protection to your family or other dependents after you die.
Whilst membership of the scheme is not compulsory there are many good reasons for being a member. As pension experts, we can give you detailed pension advice and guidance on what the benefits of the NHS pension scheme are and how they will affect you and your individual retirement plans.
Since 1 April 2008, scheme benefits depend on whether you are a member of the 1995 Section or the 2008 Section of the NHS Pension Scheme.
Members of both Sections are entitled to:
- A pension linked to pay and length of membership - Benefits are fully guaranteed and will increase each year to keep pace with inflation.
- Immediate life assurance of twice your annual pay from the first day of joining. This is usually a tax-free lump sum payable to anyone or your estate
- Pensions and allowances for your spouse, civil partner, qualifying unmarried partner, and dependent children if you die
- A tax free lump sum (optional in the case of members of the 2008 Section);
Ways to Improve Retirement Benefits
Tailored Pension Solutions' expert team can give you detailed pension advice on the various ways you can improve your retirement benefits and finances through the NHS Pension Scheme. The sort of improvements you could make include:
- Increasing the amount of benefits you get at retirement by paying extra contributions into the NHS Pension Scheme.
- Increasing the amount of benefits you get at retirement by paying extra contributions into a Money Purchase arrangement whereby additional voluntary contributions (AVCs) or into another Registered Pension are made to another provider to build up a separate retirement fund.
Get in touch today to get expert pension advice on how to improve your retirement investments with the NHS pension scheme.Go to our Pension Enquiry form
Impact of the Independent Public Service Pension Commission's (IPSPC) (the Commission)
The Independent Public Service Pensions Commission (IPSPC) found that the current public service pension structure has been unable to respond flexibly to workforce and demographic changes in the past few decades, and this has resulted in unequal treatment of members and an unfair distribution of costs between employers, employees and other taxpayers. The IPSPC published its final report on 10 March 2011.
The main recommendations are:
Public services, including the NHS, should introduce new pension arrangements for staff before the end of this Parliament in 2015.
The pension benefits members build up before new arrangements are introduced should be retained, and calculated using final pay at retirement
The normal pension age in new arrangements should be the same age at which a member will be entitled to claim their State Pension. This would currently be age 65, for the oldest members, rising in steps to age 68 for the youngest members
The new arrangements would be on a Career Average Revalued Earnings (CARE) basis, with benefits based on a proportion of pensionable earnings during your career, up rated in line with average earnings.
Planning Opportunity through recent Legislation Changes
Since 6th April 2011 the restriction on accessing cash from your pension fund has been lifted - subject to some conditions.
Flexible Drawdown is now available when a pension income of £20,000 p.a. has already been secured. This could be by means of a combination of Company Pension benefits, Private Pension and State Pension.
Many members of the NHS Pension Scheme will have secured a pension income of £20,000 p.a. As such you may benefit from directing any additional contributions into a Registered Personal Pension or AVC as this fund could then be used for Flexible Drawdown.
This would give you access to the fund outside the NHS Pension Scheme allowing you to draw higher amounts of income or cash (subject to your marginal rate of tax at that time).
Contact our Tailored Solutions' pension experts to discuss how the NHS pension scheme can benefit you.