New NHS pension scheme-can anyone 'translate'

[KiaOraOAotearoa]

Apparently they will reshuffle the whole thing in april 2015, again. I am trying to understand but fail, the 1/54 ratio means the contributions change again as well?
Can someone explain?

No one?

Hmmm when I started it was 1/85 which meant something about how much you get as a final salary, mine is 1/65 which means now I get less as I had a break in service and that figure means you get even less so if I earn £10000 per annum now and retired I would get £6500 pension per year!

So, it is salaryX1/54, that gives you the pension per year. Don't get it, is it in fact,less than a week's pay? (More or less, 52 weeks in a year). That can't be right, but I can't seem to get it, they lose me with all the jargon!

Usually the 1/something things mean per year's service. So with 30 years working for them at 1/54 you'll get 30/54 of your pay as a pension.

(disclaimer - i don't work for the NHS or have a final salary pension pot so cannot be classed as an expert)

*loose, sorry!
It's a bloody big chunk of salary and quite an important part of one's finances, but it's veiled and worded in such a stuffy and complicated way!

Oh, that makes more sense! Of course!
Thank youpootle

I'll make it simple - since the changes.....

You pay more
You get less

depending on your salary the gap could be tens/hundreds of thousands over a career

(COI also in NHS pension)

As I understand the NHS 2015 arrangement, it as a CARE scheme not a final salary scheme. This means that instead of getting a pension equal to 1/54th of your final salary for each year of service, you get a pension equal to 1/54th of your career average earnings (with some allowance for inflation). There are lots of different ways of doing the maths for this, but say you work for 10 years and start on a salary of 10,000 and finish on 20,000 and salary goes up by 1000 each year.

In a final salary scheme you would get 10/54 x 20,000

In a CARE scheme you get (1/54 x 10,000) + (1/54 x 11,000) x (1/54 x 12,000) etc all the way to (1/54 x 20,000). As I said an additional amount will be added to allow for inflation but the CARE scheme calculation will give a lower figure than a final salary calculation.

Hope that helps a bit.

On the other hand it is still gold plated with bells on compared with ANY DC pension so please do not grumble too much : the "employer" the rest of us contributions outweigh the employee contributions around four to one so its a LOT better than nothing.

talkinpeace the employer contribution is only a couple of percent more than my employee contribution so I don't know where you get four times more.

Thank you all for the input.
Financially, it's not a tremendous deal, if you save £150 a month say, for 25 years, you'd have £45 000 by the end of it. Put it in an NHS pension and you'd have about £16 000 a year in pension. Bearing in mind pensionable age is 65 so far. But a nurse age 65 isn't in the same boat as someone who worked in a non physical job, so health wise, who's to say how long you'd benefit from the NHS pension?
It this outweight by the insurance that comes with it: ie if you have to retire on health grounds. I'm unsure as to what other benefits the NHS pension brings.

So if you survive more than 3 years post retirement, you are quids in?!
And if you survive 10 yrs, you get 160K, from the 45K you've put in??
The money will never run out. If you carry on breathing, the money keeps coming in.
Disclaimer: I've completely ignored inflation and interest here.
If you can possibly afford it, keep paying in. It is a GREAT deal.

Soggy for defined benefits, the employer usually puts in a significant amount. I think that work (before they closed it), were funding each person with about 25% of salary - so 5% from employee and 25% from employer (there was a deficit!).

Defined contribution usually involves much smaller employer contributions, and larger employee contributions (say maybe 5% from you and 8% from employer). The overall pension is usually much lower as a result, but depending on market conditions you may be very lucky (or very unlucky if you retire during a stock market crash)

Soggy for defined benefits, the employer usually puts in a significant amount. I think that work (before they closed it), were funding each person with about 25% of salary - so 5% from employee and 25% from employer

I thought this thread was about the NHS pension scheme? Employer contribution is 14% and employee is anything from 5-14.5 depending on how much you earn. So only the lowest earners will have an employer's contribution that is a multiple of the employee one and the highest earners are paying more than the employee contribution.

Soggy
The NHS scheme is unfunded : the taxpayer tops up any and all deficit - there is no defined amount like the LGPS

currently the taxpayer is looking to pump in over three times as much as the employees

the maths is simple
you work for 30 years on a salary that started at £5000 and ends at £50,000
you get a pension based on the £50,000 even though you did not pay contributions on that for 29 of the 30 years

return rates on investments went through the floor 15 years ago
life expectancy has risen hugely in that 30 years

so to make up the difference the employer - taxpayer - coughs up

Talkinpeace - those numbers would only apply if the pension is final salary. I understand the changes are to move to an average earning scheme.

In an average earning scheme, if you only work one year at £50,000 then only 1/54 will be based on the £50,000 salary. Gooseyloosey's explanation is as I understand it.

I think the changes are similar to the Civil Service changes due to come in next year - moving to average salary but a higher proportion will be given for each year i.e. receiving 1/54 per year rather than 1/85 but those years early in the career when people tend to earn less will be taken into account rather than the pension being based on the salary people achieve at the end of their career.

I am in a public sector pension scheme which is average salary although many of my older colleagues are in final salary schemes & will be changing soon. I agree that regardless of whether average or final schemes, pensions such as NHS are still significantly better than what you'd get elsewhere in most cases.

The civil service are also moving to an average salary scheme (alpha) in April 2015. There is lots of well written info on the Civil Service Pensions website.

Obviously this is a different scheme, so don't assume alpha is the same as the NHs one! But the explanation actions of how a career average salary scheme works is good. In particular, there is a bar chart showing how the yearly inflation adjustment works that helped me understand.

Talkinpeace, nhs pension scheme hasn't been final salary since 2007.

I joined in 2008 amd am an on a career average scheme. I was/am on a 1/60 scheme. So if I work for 30 years I will get a pension equal to half my average wage. No lump sum for me either.

I joined the NHS in 1996. I was full time until 2005 (baby) and have been part time since then (although looks like I may be returning FT soon due to short staffing).
No idea what I will get!

You haven't mentioned the tax free lump sum which you can reinvest yourself or use to pay off the mortgage etc.My pension will be £15,000 but my lump sum will be £37,000.We have a pensions advisor for the trust that will provide a forecast if requested.

Galaxy
it may be final salary, it may be career average
it may be differing increments
BUT
the LGPS, NHS, Teachers, MOD, Civil Service, Police, Fire and Ambulance pensions are still

"Defined Benefit"

rather than the odious cess pit that is defined contribution.

Hang on to it for dear life as those of us in the private sector had such things abolished (not just limited) 20 years ago

Well I left the private sector in 2006 to go back to uni and kissed goodbye to my private sector final salary scheme then. The company I worked for has now closed its final salary scheme to new entrants but their new scheme is still defined benefit. And if I'd stayed I'd have got my pension at 55. Really wish I'd stayed now. Worst thing I did leaving there.

Im not going to complain too much about pension rights as the only real perk of working for the government and its endless re organisations , petty targets etc is the pension at the end.But i am going to be moved to a new scheme with no say.Sure can retire still at 60 but only with v reduced amount.

final salary schemes only work out better if you end your career on your highest salary.

With workers having to stay on nowadays to 65..70 etc more and more people will be looking to work part time due to the sheer exhaustion of a physical job in those later years.

Career average pensions work out really well for people who go down to part time work in the final few years.

Good point i think i will have to do this looking at going part time by 50 /55.Is is worth buying extra years for pension