Page 3 | Nosy NHS pensions question

Jazz12 · 2022-12-10T16:10:43+00:00

Our friends are doctors. He is a GP and she is a hospital consultant. They are both 45. I always assumed they are on final salary pension. They say rules changed and they aren’t! Are NHS doctors not on final salary pensions? Is that a thing of past??

TheHateIsNotGood · 10/12/2022 22:24

Hardly anyone gets FSP anymore, coz we lives too long innit. Some people, including some doctors, will still get a proportional element of their Pension on an FSP basis if they were employed during the applicable time.

MissyB1 · 10/12/2022 22:30

TheKeatingFive · 10/12/2022 18:23

Is there a reason the lifetime allowance and annual allowance are posing problems for NHS employees specifically

The vast majority of workers will never get anywhere near their lifetime allowance. NHS consultants are a bit of an outlier on this point due to the amount they are putting into funds.

Just to make it clear they don’t have any choice about the amount that has to be contributed. It’s not like they can ask to pay less in.

choirmumoftwo · 10/12/2022 22:33

@Fedupofdiets you need to make sure you have a total rewards statement every year which will give you your pension projections. Google it.

Pterrydactyl · 10/12/2022 22:40

MissyB1 · 10/12/2022 22:30

Just to make it clear they don’t have any choice about the amount that has to be contributed. It’s not like they can ask to pay less in.

Show quote history

Yes, the only option for NHS staff who want to pay less in pension contributions is to opt out of the pension scheme altogether.

Which has obvious drawbacks.

Testina · 10/12/2022 22:51

I’m with you that the McCloud implementation is a shambles.

”And the new one is definitely not gold-plated”

Disagree with this though!
Any kind of DB scheme is good.
CARE isn’t as good as FS for most people, but it’s not bad for the lowest waged with lowest prospects.
A 1/54th accrual is pretty good.
The CPI + 1.5% annual uprate isn’t bad at all.

I think it’s more that the previous scheme was platinum plated, making this gold one seem a bit tarnished. I don’t think that the liability of FS schemes now the life expectancy rates are so high is sustainable. I was personally gutted when I lost 1/3 of my projection overnight with a change from FS to CARE (not NHS) but financially think it was the right move for the scheme.

paintitallover · 10/12/2022 23:12

Jazz12 · 10/12/2022 17:13

It sounds too complicated !! Does that mean someone who started speciality training in 2010, became a consultant in 2016 is likely to get over £50k a year in pension when they retire!?

Being nosy? Sure you are!

Princessglittery · 11/12/2022 01:38

@LlareggubTripAdviser @Testina The reason McCloud is taking so long is the complexity and sensitivity of not getting it right. It is not as simple as saying we are going to treat you as though you were in the pre 2015 scheme, for each tax year you have to look at contributions paid, voluntary contributions for added years/pensions and the amount of tax paid, impact on annual and life time allowances and so tax paid, which scheme is more beneficial, what different decisions people would have made, for those who had I’ll health retirement reviewing the rules etc. in addition they had to pass primary legislation in order to be able to make any changes. So much more I could add. Remember some people who will get the remedy are the bereaved spouse and/or children of a public sector worker.

The consultation was on the methodology I.e. make you choose now which scheme you wanted to be in or wait until you retire and then make a choice. It was a really important decision and it is right everyone was consulted.

I do not envy anyone involved in sorting it out as it’s a vast job where you are only likely to get complaints.

Sunshineandrainbow · 11/12/2022 01:50

Ihavedogs · 10/12/2022 22:14

You should get an annual statement in the summer which will lay out your pension statement. If you are a current member you can access anytime by logging into ESR.

Show quote history

Does the statement show what you would get at retirement should you stop working for nhs now?
I have two nhs pensions and I am age 46 with 23 years service and really don't understand it but looking to change jobs.

MissyB1 · 11/12/2022 08:33

Pterrydactyl · 10/12/2022 22:40

Yes, the only option for NHS staff who want to pay less in pension contributions is to opt out of the pension scheme altogether.

Which has obvious drawbacks.

Show quote history

Yes including the loss of death in service benefit. My dh has a health diagnosis so coming out of the scheme is simply too risky. He will have to retire at 60 or possibly before as he will definitely hit the lifetime allowance by then.

TheWayOfTheWorld · 11/12/2022 08:37

countbackfromten · 10/12/2022 17:58

Such an odd thing to be nosy about. And given friends of mine are getting huge tax bills on their pensions thanks to the annual allowance and lifetime allowance and the ridiculous state we are now in, senior doctors are dropping clinical sessions and not doing any extras to avoid being stung or even retiring early. Absolutely ridiculous situation.

Yep - one of DH's colleagues is a newish consultant (2-3 years) and has just been hit with a tax demand for £40k .

We're getting an accountant in who specialises in NHS pensions to see what DH needs to do to make sure we don't get a similar nasty surprise (I don't currently understand all the ins and outs)

Notanotherone5 · 11/12/2022 08:38

Princessglittery · 10/12/2022 16:50

If they joined before 2015 they are likely to have 2 pensions, one final salary and one career average. Both are Defined Benefit (DB) schemes. Whilst the 2015 scheme is viewed as less favourable because the Normal Pension Age links to State Retirement Age it is still a very good pension.

Depending on how nosy you want to be the rules are available to everyone to read: www.nhsbsa.nhs.uk/member-hub/membership-nhs-pension-scheme

There is a complication known as the McCloud judgement that may affect your friends www.nhsemployers.org/articles/mccloud-remedy

In addition there is a tax issue for all high earners irrespective of employer with the Annual Allowance and Lifetime Allowance limiting the amount of pension contributions that are tax free.

To be honest, I wouldn’t say having such a large pension that I’ve reached annual / lifetime cap and therefore have to pay tax would be such a big worry. A but my diamond shoes are too sore!

TheWayOfTheWorld · 11/12/2022 08:45

@Notanotherone5 it's a huge problem when you're taxed on money you haven't actually received (aka a dry tax charge).

LlareggubTripAdviser · 11/12/2022 09:01

Princessglittery · 11/12/2022 01:38

@LlareggubTripAdviser @Testina The reason McCloud is taking so long is the complexity and sensitivity of not getting it right. It is not as simple as saying we are going to treat you as though you were in the pre 2015 scheme, for each tax year you have to look at contributions paid, voluntary contributions for added years/pensions and the amount of tax paid, impact on annual and life time allowances and so tax paid, which scheme is more beneficial, what different decisions people would have made, for those who had I’ll health retirement reviewing the rules etc. in addition they had to pass primary legislation in order to be able to make any changes. So much more I could add. Remember some people who will get the remedy are the bereaved spouse and/or children of a public sector worker.

The consultation was on the methodology I.e. make you choose now which scheme you wanted to be in or wait until you retire and then make a choice. It was a really important decision and it is right everyone was consulted.

I do not envy anyone involved in sorting it out as it’s a vast job where you are only likely to get complaints.

I understand that there are difficulties but it's been FIVE YEARS !

There really is no excuse for not being able to give people an accurate quote when they apply for their pension.

I have effectively been sent a figure which says 'we can tell you what you will get based on the illegal manoeuvres of the government 7 years ago. However if you decide to go for the much more favourable pension , we will adjust all of these figures 'after' October 2023.

Really how hard can it be for the average worker. ? For sure their are widows , child pensioners etc (for which I really hope this has been long-since 'remedied' ) - but why can't they put a 'classic' calculator on the pension portal ? There is one for the CA scheme.
It's simple an algorithm of the 2 different formulas..

This has made me cynical now.. do they not want us to 'compare' as that will show with stark relief just how much we have been shafted ?

memorial · 11/12/2022 09:06

MissyB1 · 11/12/2022 08:33

Yes including the loss of death in service benefit. My dh has a health diagnosis so coming out of the scheme is simply too risky. He will have to retire at 60 or possibly before as he will definitely hit the lifetime allowance by then.

Show quote history

He doesn't have to retire hecan just stop contributing

Princessglittery · 11/12/2022 09:10

Notanotherone5 · 11/12/2022 08:38

To be honest, I wouldn’t say having such a large pension that I’ve reached annual / lifetime cap and therefore have to pay tax would be such a big worry. A but my diamond shoes are too sore!

Show quote history

@Notanotherone5 the big issue is because of the allowance doctors are reducing their hours or refusing to work overtime so if you need treatment on the NHS there is less resource.

MyrrAgain · 11/12/2022 09:17

LlareggubTripAdviser · 10/12/2022 22:20

Public sector pensions (Teachers, Police, Civil service, NHS etc) are all broadly similar. The 'gold-plated' line related to the final salary aspects and that they were index linked. (Went up with the retail price index)

In 2015 The government told all public sector pension members that the way their pensions accrued and would be paid was being changed.

In my case (and broadly in the other public bodies) this meant that anyone who was within ten years of their retirement date (so for me this was 60) .. would stay as things were and be able to continue accruing pension , ( retiring on a final salary 1/80 scheme.) So someone aged 55 in 2015 would work another five years and reap the benefits.

As an example (final salary)
Years worked : 30 x salary : 45000 (at retirement) / 0.08 = pension of £16875 pa.

Everyone who was below the 'cut off' age (under 50) was pushed into the new scheme. Which is a career average. They would have their final salary pension 'frozen' which could be taken at 60 but from 2015 could not add to it, could not increase it or pay into it anymore.

As is pretty obvious to anyone with even basic legal knowledge will know, this decision was hugely discriminatory. And was found to be so by the high court, (the mcloud judgement) . First of all on age grounds (50-60 year old gain whilst those under 50 lose out) .. and again on sex discrimination grounds as a 'career average pension' affects women who take maternity leave, part time for child care reasons etc). The government was forced to reverse the decision and put everyone back in the final salary scheme if they chose to do so. Until APRIL 2022 When it closed to everyone.

Annoyingly, this still hasn't been completed and anyone like me who plans to retire this year can't actually find out what there pension will be. We have to claim it 'as is' (which for me is 4 years missing final salary and my salary has increased by 15k in that time due to promotion) .. and then get it adjusted in October 2023 when the 'remedy' will be applied.

It's a complete fucking shambles. The court case was won in 2018 and it's taken FIVE YEARS to go through 'consultations' just to check that people would REALLY prefer to have the old better pension than the much worse new one !!

So no OP. There is no longer a final salary pension in the NHS or Civil Service. And the new one is definitely not gold-plated. Another reason people are leaving NHS in droves . Shit salary was bad enough.. but at least the pension was half decent. Now there isn't even that. Not surprised they counselled against your nephew becoming a doctor.

@LlareggubTripAdviser

I didn't know this! And how do they let nhs workers know if they want the last 7 years to be back on the their old 1995 or 2008 scheme, rather than the enforced 2015 one they were switched to? To they write to us?? Do we explicitly get the option or do we have to write in and beg and get ignored?

Princessglittery · 11/12/2022 09:46

LlareggubTripAdviser · 11/12/2022 09:01

I understand that there are difficulties but it's been FIVE YEARS !

There really is no excuse for not being able to give people an accurate quote when they apply for their pension.

I have effectively been sent a figure which says 'we can tell you what you will get based on the illegal manoeuvres of the government 7 years ago. However if you decide to go for the much more favourable pension , we will adjust all of these figures 'after' October 2023.

Really how hard can it be for the average worker. ? For sure their are widows , child pensioners etc (for which I really hope this has been long-since 'remedied' ) - but why can't they put a 'classic' calculator on the pension portal ? There is one for the CA scheme.
It's simple an algorithm of the 2 different formulas..

This has made me cynical now.. do they not want us to 'compare' as that will show with stark relief just how much we have been shafted ?

Show quote history

Actually it’s the opposite of being shafted, they have chosen the most favourable remedy and at some point you will be given a choice of one scheme or the other with exact figures based on your service, earnings how much tax you paid etc. So you will be able to compare the two, no conspiracy.

My understanding was they wanted all current public sector workers in the new schemes from 1 April 2022 which they have achieved. Then, as you say, they are focusing on ill health retirements and widows etc. Next is those due to retire after 1 October 2023, then everyone who has already retired.

Remember there is no average worker, your pension start date, your earnings each tax year, your service (PT/FT), absences, contribution rates, tax etc. are all being taken into account for the remedy calculations it’s not the normal pension calculation. When you are having to look back over so many years it’s complex.

The calculation you currently have is a good baseline, you are not going to be worse off than that.

I am slightly a contradiction as I have a pay and reward background so understand what it is going to take to correct everyone’s pensions. I am also retired and yes it is frustration waiting for the remedy but I know how complex some cases are going to be. I also know I am receiving a pension that is roughly right.

Princessglittery · 11/12/2022 09:54

MyrrAgain · 11/12/2022 09:17

@LlareggubTripAdviser

I didn't know this! And how do they let nhs workers know if they want the last 7 years to be back on the their old 1995 or 2008 scheme, rather than the enforced 2015 one they were switched to? To they write to us?? Do we explicitly get the option or do we have to write in and beg and get ignored?

Show quote history

@MyrrAgain if you are still working you will be given a choice when you retire of which scheme you want, with figures. If you are already getting your pension they will contact you in due course.

www.nhsbsa.nhs.uk/changes-public-service-pensions

MyrrAgain · 11/12/2022 10:03

@LlareggubTripAdviser

Ok great! Let's hope they remember in 20 years time

Mango101 · 11/12/2022 10:15

Pension scheme for doctors is ridiculously complicated.

But the main problem is the unfair pension tax which effectively started about 5 years ago. This means unpredictable bills (on top of all the normal taxes) which could be anything from 0 to 100k a year.

It'a a disaster and will pretty much destroy the NHS (staff recruitment and retention) unless it gets fixed.

MissyB1 · 11/12/2022 10:20

memorial · 11/12/2022 09:06

He doesn't have to retire hecan just stop contributing

Show quote history

He will definitely retire as in taking the pension, no point in not retiring if you have reached the lifetime allowance. What most of them do then is go back part time which is what Dh will do. It’s a lot of lost hours to the NHS.

memorial · 11/12/2022 10:23

MissyB1 · 11/12/2022 10:20

He will definitely retire as in taking the pension, no point in not retiring if you have reached the lifetime allowance. What most of them do then is go back part time which is what Dh will do. It’s a lot of lost hours to the NHS.

Show quote history

I understand NHS pensions being one who was just forced into 2015 and waiting for mcloud to correct it.
If he can retire at 60 then he is on the old 1994 pension. On 2015 it's still linked to state retirement age so if you actually retire at 60 on 2015 you lose 5% per year before retirement age.

thesurrealist · 11/12/2022 10:24

Brava · 10/12/2022 18:33

The NHS pension is now a career average pension - so it is still a defined benefit pension (valuable and gives you a guaranteed pension at retirement) but is no longer based on the final salary but a career average Salary. This is less generous (generally) than final salary but still a very attractive pension.

If you can afford to pay into it. I have several colleagues who have left the pension scheme in the last couple of years because they just can't afford to pay into it any more.
And then there was the whole debacle of the poor bastards on 8a that ended up losing their pay increase because of the increase in pension contributions.
If you've been in and out of the NHS - like I have and many colleagues - it's just not worth paying in.

TheKeatingFive · 11/12/2022 10:41

If you can afford to pay into it.

Pension provision is expensive, people need to get their heads round this. You will not find a better scheme in terms of return for investment.

If you've been in and out of the NHS - like I have and many colleagues - it's just not worth paying in.

It really, really is.

There needs to be a lot more education around the importance of saving for retirement and helping people recognise valuable schemes when they see them.

CoffeeBoy · 11/12/2022 10:47

What happens if I’ve left the nhs but am still working but want to contact someone to ask for a forecast? I don’t have access to the electron8c payslips anymore where you could click on your pension tab and look at it. Do I contact m6 ex employer or someone nationally? I don’t even have an old payroll number.