Can anyone explain my NHS pension figures? I just don’t understand it.

[WantingToEducate]

Hi all,

I have recently posted about me leaving my NHS job and trying to find out what happens with my pension.

I have since been in touch with my Trust’s Pension department who have sent me an 8 page document about all the NHS jobs I’ve had over the last 17 years and there are numbers everywhere and I just don’t understand it.

I have attached a page that has really confused me….

1. What are pensionable earnings?

2. Why are my pensionable earnings decreasing even though my salary has been increasing?

3. What are the “pension earned” amounts ? Where have those numbers been plucked from?

About £100 a month would come out my
pay packet each month to contribute to my pension, so why are the figures only around the £400 mark? Especially as the NHS pays 14% of our monthly pay into the pension too.

I’m just so confused.

I’ve already left the Trust so I can’t access any of my pay slips (they are sent to us electronically) so I have no way of calculating exactly what my annual pension contributions were….although I know they were definitely more than £400!

I’m feeling so stressed 😢

And what on earth is revaluation?!

Pensionable earnings is the salary your pension accrual is based on. I don't know why this has decreased - are you part time? That's the most obvious explanation.

You earn a portion of your salary in pension each year, looks like you're earning 1/54th (this is huge!).

That pension will increase with inflation (probably subject to a cap) between now and your retirement date and then be paid for life.

The other reason for the fall in pensionable earnings may be a change in the definition, defined benefit pensions like this have become extremely expensive to provide for employers, hence reducing benefits.

I know pensions but not NHS.

The “pension earned” is what you will get paid each year, for life, when you retire. Add them all up & you’ll have your total pension.

Revaluation is how much it has increased by to take account of inflation.

What you need is

Your employers policy value
Your employee value

You should have two policies.

From those you should be given an estimation of what you could get when you retire

You can take the EE policy at anytime as this is your money.

You should also have pensions from all jobs you’ve held and not just NHS

Can you give us a bit more detail

Your pensionabke earnings would go down if you used a salary sacrifice system eg for childcare vouchers or a bike purchase deal, have you done anything like that?

The pension accrued each year is what is being added to your eventual index-linked pension. Add up that whole column (Does it go back further than the screenshot you posted?) and that is your annual income if you wait till 67 to receive it. You will get less if you retire early.

But if approx £1200 (minimum) of my pay each year is put into my pension why is it only giving figures of approximately £400?

And I’m guessing that’s excluding the contribution the NHS also makes to our monthly pension amount.

I think I’m going to have to book a face-to-face meeting with someone from the department and go through the document with him page by page because not much of it make senses. It’s just 8 pages of confusing data 😢

Apart from the details on the attachment above there is no mention of anything between the years 2015 up until now.

The document begins with “your pension status in March 2015 was….”

(March 2015 is when I started my job with them so my status was based on my previous 8 years in the NHS)

But there’s absolutely nothing about what my status is now.

All I want to know is what my current total pension amount is, I.e what is the total sum that I’ve accumulated over the last 17 years. Why is it so difficult to find that out? 😬😢

The £1200 you put in in one year contributes £400 to your pension for each year you will receive it. If you live for 20 years post retirement, the £1200 contribution will have earned you £8,000 in pension over your whole life.

You're right that you should be given a single pension figure, are you sure it isn't somewhere in the document? In any case if you haven't added to your pension since 2015, it will be that figure increased in line with inflation.

Ooh I’ve missed loads of replies - thank you everyone.

The screenshot above starts from 2016 but I’ve worked in the NHS since 2007.

There is no data at all about any pension contributions for the years 2007-2015.

2015 is the year I started working with this Trust and there is no information regarding my pension with any of my previous NHS jobs.

So if the £1200 only provides me with £400, where has the other £800 gone?

I have paid into my pension every month - it is automatically deducted from our pay
packet.

The NHS pension scheme is unfunded. That means what you contribute now does not go into a ‘pot’ for you later in lfie, but rather pays for the pensions of current retirees.

the amount you pay in now ‘confirms’ your membership of the scheme later in life, your final pension will be index-linked and based off of your earnings and time working for the NHS, not the amount you have contributed.

I really wish I hadn’t read this guy’s email just before bedtime as now my head is spinning. I won’t be able to sleep at all whilst trying to make sense of all this 😬😂

For example, if you earned 20k and worked for the NHS for 30 years, you would be entitled to a yearly pension of about £11k, plus it would keep up with inflation and obviously your salary would probably increase in that time so it’s just to give you an idea.

over that 30 year period, you would only have paid in £59k. That’s equivalent to about 5 years of pension- hopefully you will live longer than 5 years post retirement! So you pay in a lot less than you get out.

essentially the calculation made will be:

total amount you have earned over your career

divided by 54

multiplied by number of years you have worked for the NHS and contributed to the scheme

adjusted for inflation

I have a teaching pension, and teachers pensions are administered by a single organisation centrally. All my last school could tell me would be what I paid into my pension when working for them. I'd need to login to my Teachers Pension account to see the whole overview for my entire teaching career. Surely the NHS has something similar?

Sorry I have got that wrong!!!

it is:

total amount earned over career

divided by 54

adjusted for inflation

late night brain 🤦‍♂️

So let’s say you earn 20k one year, and 25k the next

Divide by 54:

tou have added £370.37 the first year
and £462.96 the next year

if you were then to retire from the NHS yoy would receive a pension of £833.33 for life despite having only contributed £5,390 (6.5 years of pension)

That doesn’t sound very much money.

Is the “money earned” the take home pay?

As an average I have probably earned about £300’000 over the last 17 years (at an average of my take home pay being £1500 a month.

So if I were to divide that amount by 54 it would be approx £5’500.

So that’s all I would get for my NHS pension?

Are you planning on retiring this year?

I think the reason your table starts from 2016 is because in 2015 the NHS pension changed from the 2008 scheme to the 2015 scheme - basically, a completely different way of calculating what you get. I’d be surprised if that passed you by so wilt go into why and the differences.

Since year 2015/16 you’ve been in a career average (CARE) scheme. What you pay in and what the NHS pays in is irrelevant to your calculation.

But just to explain where your “£800” went… you didn’t put £1200 in. You swapped £1200 for £462.04 per year FOR LIFE, after retirement age. That’s a lot better than £800 or £1200!

What you actually get isn’t strictly £462.04. What you get is 1/54th (1.85%) of your pensionable earnings. Grab your calculator - you can see that yourself!

So that’s 1.85% of your year’s salary, for life after retirement.

But, the NHS recognises that £462.04 today will be eroded by inflation. If you get £462.04 in 30 years time, that might be fuck all. Like pennies now.

So every year they use a “revaluation” and (usually) increase your number. There’s an exact calculation for what % they use - I won’t go into detail, and it’s not exactly inflation - but think of it as being like inflation.

So all those previous years you see there were increased every year linked to inflation - that’s the revaluation number (particularly high this year, not a mistake).

So your pension since 2015 is all those £4-£600 amounts added together, paid to you every year. Plus whatever you accrued in the 2008 scheme.

Lots of people have explained.

But again

So each year whatever your salary is they divide it by 54.

So the number once they divide by 54 is approx £400.

That means you will get £400 a year for your pension.

If you work for 2 years and earned more the second year.

So once divided by 54 the number was £450.

That means added with the first year the total is £850.

So if you work for the nhs for 2 years your pensions each year will be £850. Which is Approx £71 a month.

So if you earn about the same and you work for the NHS for 10 years.

You will get approx £8000 a year. Which would be about £710 a month.

And each year of pensionsable pay is evaluated. The amount increases by CPI.

So the money you earned 10 years ago increases by approx 3% each year to account for inflation.

So after 10 years pension would actually be a lot more than the £8500.

It's worked on your gross income not take home.

It tells you your pensionable earning on the pic you posted.

As to why your pensionable earnings have gone up and down each year - have you changed job or pay or hours? Do you have allowances in your pay - like shift work? Have you used childcare vouchers? All of those can vary it. Your pension isn’t based on your exact pay packet but what your contract says is pensionable. So my non NHS job pays a bonus - doesn’t count for pension. My friend - non NHS - can do overtime, but that doesn’t count for pension. A one off cost of living payment won’t be included in pensionable pay.

I’m not retiring as I’m only 39, but I’m leaving my NHS job and I’m very unlikely to return to the NHS.

I think I will have to come and re-read all this again in the morning as midnight-brain is struggling to take all this information on board.

Thank you to everyone who has helped. I may not be able to fully make sense of it now but hopefully my post-sleep brain will understand it much better.

Just going by the 8 years you have posted. You have banked approx £4191 pension. This will be updated by a percentage so will be higher when you actually retire.

So you will already get at least £350 a month just from those 8 years of work

Can you find your total reward statement? That will show all of your entitlement.