Question re NHS pension

[sunshinecloudsrain45]

Explaining this for a friend who’s not on mumsnet. If said friend decided to go from a band 7 to eg a band 2 role for a few years prior to retiring, how does that work with pension and lump sum? Does she still get the band 7 lump sum when she draws down her pension and any thoughts on how her pension would pan out etc Thanks

Her lump sum and pension will be reduced but it’s complicated if she switches from a band 7 to a band 2 job. The amount it will be reduced by depends on whether she has pension in more than one scheme and how long she has been in the scheme(s) for at different salaries. If she can’t work it out for herself it would be worth asking a financial advisor to assist.

Please don't take Mumsnet advice on something so important, particularly with so little info provided. She needs to sit down with the NHS pensions people to get a proper answer.

Totally will depend on which scheme she is - and how much she has in the legacy schemes. The 95 and 2008 are final
salary - so yes reducing your salary slll have a big impact on pension and lump sum. Although to be precise they are either best if the last three years or an average of the next few years - so it’s ok if only dropping your hand 2 for a year so so.

The 2015 scheme is based on an average of your overall earnings - so dropping pay will reduce your contributions and so your pension but only by a bit if most of your career was at band 7

Retire and return or partial retirement are other options here

There are so many variables to consider (her age, how long it is until she plans to retire, how many years she has in the different schemes, how pension is calculated for each scheme, what the early redemption penalties are, and what her options are under the McCloud ruling) that she must speak to a NHS pension person before doing anything.

changing from band 7 to 2 could massively impact her pension if all the above factors are not taken into account. Do not rely on any old pension advisors, she really needs someone with sound knowledge of all the NHS pension schemes.

She can find out which schemes she is in by looking on ESR for her total rewards statement.

there are facebook groups she can ask, these are generally much more knowledgeable

Her Trust's pension team should be able to advise her. That is what they are there for.

There is no lump sum in the current NHS pension scheme it is a career average so reducing her salary will affect her overall pension. If she has a 1995 pension which includes a lump sum but it will make no difference as that will have been locked down in 2022 when the scheme ended.

I took my 1995 section pension last year and although contributing years ended in 2022 it was based on my final salary over the past 365 days, so if she’s got 1995 benefits it will make a huge difference. She could retire while at B7 ( if age 60, or look into penalties for taking a bit earlier) and return on a lower salary and be in the new pension scheme, while claiming the 95 benefits.

they are not good ime

eg, my trust pension advisor just advised it was a no brainer that at 60 we retire and return or take partial retirement, thus claiming the pension.
without considering whether the actual hospital department would agree to this, which, in many cases, they do not

I would post on the NHS pension Facebook page they are great.

You need more info first such as which pension she has and how long she is planning to stay at work from now.

Appropriate responses have already been given.

The 95 scheme still retains the link to final salary despite the scheme being closed (unless circumstances are met to protect it).

I always wondered this and couldn't see a clear answer. This makes me really happy though as I was only on 30 hours in 2022 and now full time until I take mine in 9 years (and counting!!).

She needs to understand how each of the pension schemes work and then take advice on options before dropping so many bands. Her pension would be reduced by taking this action, either due to the link to final salary or due to the lower build up due to the lower salary - depending on the schemes she will be in.

Pen-gage has a face book page, but more importantly offers free webinars explaining how the pension schemes work. She could of course read each of her scheme guides which is she can’t find hers are available online via NHS Pensions.

@EleanorReally my Trust's pension department have been great! I'm not sure if everyone can retire and return at 60 any more, on the 'new' pension plans, certainly not if they are admin. I was (originally) on the 1995 scheme and did retire and return at 60, so that I could come back on reduced hours and still retain my pension based on full time hours from the 1995 scheme, while earning additional pension under the new scheme for when I finally retired completely.

This isn’t entirely true. The 1995 section still uses the final salary to work out the income and lump sum, not the 2022 salary. There is also a way to ring fence your higher salary specifically to allow you to drop to a lower band for a few years before retirement. But it’s complicated and she needs to get professional advice from someone who understands the NHS pension schemes. I agree that NHS HR/payroll are not very good and I wouldn’t rely on them.

Is it final salary from the last year or best of the last 3 years?

oh why not admin?
and i believe you can retire and return but i gather from the facebook page it is a risk as the terms and conditions might be reset and the contract might only be for one year, caution needed

I think retirement ages are different for clinical staff. As an admin person I can't claim the remaining part of my pension until I reach state pension age. Another year to go for me. Retirement age for nursing staff (for NHS pensions) used to be 50 on the 1995 scheme... I have no idea what it is now.

It’s the FTE salary for 95 scheme. The amount of service accrued will have been reduced for part time working so your pension will have built up at a lower rate during the time you were working full time. The appropriate scheme guides will tell you how things are worked out and can easily be found on NHS Pensions website.

Tbf trying to navigate the NHS pensions website is a minefield and so confusing hence me asking. I've worked in the NHS since 95 and still struggle to get my head around it.

what is the FTE salary for 95 scheme

Being able to find and understand the information are two different things, but you are not alone with either of them. The guides can be found in the members hub on the pensions website and if you are struggling to understand things, see if you can go on a retirement workshop via your employer, or have a look at the free webinars that Pen-gage offer.

Full time equivalent of whatever pay band and point you are on.