Pensions

Your NHS Pension after 1 April 2022 | NHSBSA

From 1 April 2022, all active members regardless of age will be members of the 2015 NHS Pension Scheme. Many of our members are already part of this reformed scheme. All legacy pension schemes will be closed, including the 1995/2008 NHS Pension Scheme. This means that when you claim your pension, it could consist of up to three different parts of the NHS Pension Scheme.

www.nhsbsa.nhs.uk

https://www.nhsbsa.nhs.uk/changes-public-service-pensions/your-nhs-pension-after-1-april-2022

From the 1 April 2022, as part of the McCloud remedy to remove age discrimination from the NHS Pension Scheme, all members of the NHS Pension Scheme will be moved to the 2015 scheme.

Three key facts:

·       pension already built up in the 1995/2008 Schemes will not be lost

·       all members will be in the 2015 Scheme from 1 April 2022

·       staff do not need to make any decisions now.

The following resource outlines the facts and the myths associated with each of these key messages

https://www.nhsemployers.org/sites/default/files/2021-09/MCloud-Supporting-staff-move-to-2015-NHSP

Further information is available at the following link

Supporting members to move to the 2015 NHS Pension Scheme from 1 April 2022 | NHS Employers

As you will no doubt be aware there has been, and continues to be, much activity around pensions and pension taxation over recent months and, as a Trust, we have tried to communicate all developments to you in a timely manner.

The most recent development, agreed by the Secretary of State with NHS England and NHS improvement, to support service delivery amid concerns around growing winter pressures relates to the use of ‘Scheme Pays’ and taxation that may be due, related to 2019/20 earnings.

We published a short article about this on our Trust Intranet on 27 November 2019 and you may have seen some further information shared via Social Media, the press, the BMA and other fora.

NHS England and NHS Improvement developed a template letter for all Trusts to share with clinical staff who may be affected by such taxation, to clarify the offer.

Whilst there is no specific calculation that the Trust can do to definitely know who will or who will not be affected a personal copy of the letter has been sent to all Consultants, SAS Doctors and other senior clinical staff to ensure they are both aware of the ‘offer’ and able to consider how it may or may not impact their personal situation.

It may be that other clinical staff could be affected so to ensure everyone has the information, please click on the following link https://www.england.nhs.uk/pensions  for further details from NHSE/I.

If you think you may be affected, please contact Kath Griffin, Director of Human Resources & Organisational Development Kathleen.Griffin@chsft.nhs.uk , who will provide you with a personal copy of the letter.

New Guidance on NHS Pensions Tax

On 7 August 2019, the government announced that it would act to introduce pension changes to enable senior clinicians to take on additional clinical activities without incurring unexpected pension tax bills.

On 02 September 2019, as discussions continue around the NHS Pension Scheme and the associated taxation impact for some staff, NHS Employers produced new Pension Tax Guidance for use during the 2019/20 financial year, which is designed to support service delivery, ahead of any changes to the NHS Pension Scheme or wider tax system.

In recognition of the potential significant impact for NHS organisations on workforce capacity, the guidance is intended to support NHS staff and local NHS organisations and gives details about

• Taking independent financial advice;
• Existing flexibilities available to enable staff to remain in the NHS Pension Scheme;
• Possible arrangements for staff who decide to opt out of the NHS Pension Scheme.           

It should be noted that this is guidance only and employers are not mandated to implement any of the proposed options contained within the document.  That said, the Trust will consider each option in turn and decide which if any will be implemented.

Please note, this guidance clearly states that the measures outlined can be used during the 2019/20 financial year ahead of any changes to the NHS Pension Scheme or wider tax system, which may be introduced.  From April 2020 there may be new approaches that become appropriate following the implementation of scheme changes, so any decisions taken in light of this guidance from NHS Employers will be subject to further review.

If you are affected by Pension Taxation and would like to discuss any of the information provided then please contact kath.griffin@chsft.nhs.uk in the first instance.

Consultation on NHS Pension Scheme: increased flexibility

The Department of Health and Social Care (DHSC) is consulting on new proposals to change the NHS Pension Scheme to address the impact of pension taxation on NHS staff, organisations and service delivery.  You can read full details of all the proposed changes on the gov.uk website

The proposals are designed to make the scheme more flexible, to enable members of the scheme to control the value of their pension growth. The DHSC is seeking views on:

• Introducing a new flexible accrual option, which would allow senior clinicians to choose to build up a lower level of pension benefits and pay correspondingly lower employee contributions (options would range from almost zero to 100% in 10% increments);
• Allowing scheme members to phase pensionable pay increases over a set period to avoid ‘spikes’ in pay, which can create annual allowance issues;
• Who should be able to access pension scheme flexibilities;
• Improving scheme pays;
• Support and guidance for individuals; 
• The equality impact assessment of the proposals.

Annual and lifetime allowances place a limit on the value of tax-free pension savings. If an individual exceeds those benefits, a tax charge may be due on the excess benefits. A growing number of NHS employees are turning down additional work, requesting to reduce their working hours and retiring early due to concerns about pension tax. This is having an impact on workforce supply, staff retention and service delivery.

Consultation on these proposals closes on Friday 1 November 2019.

Flexing the Pensions Offer

As part of ensuring that the NHS is the ‘employer of choice’ and is able to offer a flexible, attractive and competitive reward package, highly valued by staff regardless of at what stage of their careers they are - as well as attractive to new employees, other proposals to ‘flex’ the pensions offer are being explored.

Whilst the NHS Pension Scheme is highly valued by longer serving staff, it can be seen as less attractive to those at the start of their working lives / careers. One option being explored would allow new staff to be members of the NHS Pension Scheme and choose to move some of their contributions into a workplace ISA for up to 5 years, which would allow staff to generate a cash lump sum that could be used for a mortgage deposit, paying off student loans or left to continue to grow until needed. 

McCloud Ruling – Implications for the NHS Pension Scheme

On 15 July 2019 the Chief Secretary to the Treasury published its written statement - see https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2019-07-15/HCWS1725/ , confirming that the McCLoud remedy will apply to all public service pension schemes with transitional protections, including the NHS Pension Scheme (NHSPS). 

Below is a summary of the current position:-

• On Monday 27 June 2019, the Supreme Court denied the government permission to appeal the Court of Appeal’s decision that transitional provisions introduced to the reformed judges and firefighters pension schemes in 2015 gave rise to unlawful age discrimination.
• The government respects the Court’s decision and will engage fully with the Employment Tribunal to agree how the discrimination will be remedied.
• The ruling relates to the transitional protection offered to some NHSPS members, i.e. those who in April 2015, were within 10 years of retirement when the reformed schemes were introduced.
• The Court found that those too far away from retirement age to qualify for transitional protection have been unfairly discriminated against.
• As transitional protection was offered to members of all the main public service pension schemes, the government believes that the difference in treatment will need to be remedied across all those schemes. This includes schemes for the NHS, Civil Service, Local Government, Teachers, Police, Armed Forces, Judiciary and Fire and Rescue workers.

The Employment Tribunal will determine the remedy in relation to fire fighters and judicial pension schemes. Meanwhile the government is engaging with employer and member representatives of the NHS Pension Scheme as well as the NHS Business Services Authority, which administers the NHSPS to help inform the proposals to the Tribunal

What is not clear at this stage is how wide reaching any remedy for the NHSPS will be and how this will interact with the Cost Cap process in the long term, though it is expected there will be some ‘knock on’ effect.

As part of the recent intranet update on the NHS Pension Scheme published on 20 September 2019, the guidance produced by NHS Employers Pension Tax Guidance (for use during the 2019/20 financial year) was shared.

The Trust has now reviewed the guidance and potential flexibilities we can put in place to support both our staff that are impacted by pension taxation and ensure continued quality service delivery to our patients.

With effect from 01 November 2019, subject to meeting the eligibility criteria, those staff affected by pension taxation can apply to have the employer pension contributions paid as addition to salary. The associated procedure and application form can be accessed here:

• NHS Pension Flex
• Application Form

THIS SCHEME WILL BE SUBJECT TO REGULAR REVIEW AND CAN BE WITHDRAWN AT ANY TIME.

At this stage the Trust is not pursuing any of the other proposed flexibilities in the NHS Employers guidance.

Consultation on NHS Pension Scheme: increased flexibility

The Department of Health and Social Care (DHSC) consultation on new proposals to change the NHS Pension Scheme to address the impact of pension taxation on NHS staff, organisations and service delivery closes on 01 November 2019, you can read full details of all the proposed changes and respond to the consultation on the gov.uk website.

Member guides

• 2015 Members Guide
• 1995 - 2008 Members Guide

Factsheets 

• Jargon buster
• Authorised leave career breaks member factsheet
• Annual Allowance - Does it affect me?
• Special Class status member factsheet
• Mental Health Officer (MHO) member factsheet
• MHO Max Service - Maximum pensionable
• Annual Allowance – Transition members factsheet
• Calculating Membership

Videos

• https://youtu.be/zUTk_eRz4Wg - video link for the scheme benefits.
• https://youtu.be/eVIHH38B4Mw - video link ‘identifying your scheme’

Retirement policies

• STS-HR15.RP.V1.2_-Retirement_Policy_-_October_2020_revised_Feb_21.pdf (stsft.nhs.uk)

For further retirement information, please visit  the NHS pensions agency website:

• https://www.nhsbsa.nhs.uk/member-hub/applying-your-pension

Please visit the NHS pensions agency website for more TRS information:

• https://www.nhsbsa.nhs.uk/employee-section

What is the annual allowance?

The annual allowance is the amount of pension savings an individual can make in one year before receiving a tax charge. The standard annual allowance limit has been set at £40,000 since 6 April 2014. Employees may be subject to a lower tapered annual allowance, depending on their taxable income. 

If an individuals pension savings are more than the annual allowance (in one scheme year), they will receive a tax charge on the additional amount. The tax rate charged will reflect the individuals marginal tax rate.

It is possible to carry forward any unused annual allowance, provided the individual was a member of a qualifying pension scheme, at some time during all of the three previous tax years. An individual can carry forward unused annual allowances for a maximum of three years.

Tapered annual allowance  

The tapered annual allowance was introduced in April 2016 with the intention of reducing pension tax relief for high earners. It applies to those with adjusted incomes (taxable income and pension savings) of over £150,000 and threshold incomes (taxable income excluding the value of pension savings) of over £110,000. 

The rate of reduction in the annual allowance (from the current maximum of £40,000) is by £1 for every £2 that the adjusted income exceeds £150,000, up to a maximum reduction of £30,000 at £210,000. This means an individual's tapered annual allowance will be between £40,000 and £10,000. 

Benefits are tested against the tapered annual allowance by applying a factor of 16 to the increase in the benefit (the pension input amount) over the year.

What is Scheme Pays?

The Scheme Pays option allows NHS Pension Scheme members to ask the pension scheme to pay their annual allowance tax charge to HMRC on their behalf. In return, the member’s benefits in retirement are reduced by a corresponding amount. Scheme Pays may be attractive to staff who do not have the funds available to pay their annual allowance tax charge upfront. 

Scheme Pays is available to all members of the NHS Pension Scheme who breach the annual allowance and incur a tax charge, including:

• high earners who are subject to a lower, tapered annual allowance
• employees who incur a tax charge below £2,000.

Employees must notify NHS Pensions of their intention to use scheme pays before the relevant annual deadline for each tax year.

The scheme pays election notice form is available to download from the NHS Pensions website.

Further information about Scheme Pays is available on the NHS Pensions website. 

What is the Lifetime Allowance

The lifetime allowance is the total amount that an individual can have in all their pension savings, during their lifetime, without incurring a tax charge. The lifetime allowance limit is currently £1,055,000.

If an individual’s total pension savings exceed the lifetime allowance, a tax charge may be incurred on any benefits in excess of the allowance. Any lump sum taken will be taxed at 55% and pension will be taxed at 25%.

Implications for Pension Scheme Members

Staff are strongly advised to ensure they are aware of their total pension savings and in light of their personal circumstances, how they would like to manage their pension savings, including actions they may wish to take in relation to annual and lifetime allowance limits.

A recent independent research report carried out by First Actuarial and published by NHS Employers and  two-page summary show the impact that the annual allowance has had, or will have, on some staff and what actions they are considering as a result.

Further information

NHS Pensions has an annual allowance web page and a lifetime allowance web page with further information and frequently asked questions. It also provides fact sheets on both annual and lifetime allowances on its tax information web page.

HMRC has two annual allowance calculators on its website which give an indication of whether an individual may be likely to breach the annual allowance limit in any one year.

Useful documents

• Annual allowance does it affect me
• Transition members

Information regarding NEST pensions can be accessed by clicking here.

For more information please click here.

Personal Pensions, Mid-Career Financial Planning and Pre-Retirement Workshops

We are pleased to be able to offer, in conjunction with Affinity, a range of practical workshops, delivered face-to-face and online. These courses and workshops have been designed to help you understand and make decisions with confidence about financial, pensions and retirement matters and to find out about where / how to get further help, information and advice.

Click on the course titles below to find out more information. Courses are delivered both online and face-to-face:

• Retirement (one day course)
• Online understanding your pension tax allowances (one hour course)
• Focus on your finances (two hour course)
• Online retirement course (two and a half hours)
• Online focus on your finances course (one and a half hours)

To book your place on any of the courses scheduled below, simply click on the event and select your date:

Remaining online events for 2022:

Calendar of events for 2023: