Choice 2
Information and actions for employees
Why Choice 2?
A key component of the new 2015 NHS Pension Scheme is a higher
normal pension age, equal to member’s state pension age, with
pension reduced if a member decides to retire earlier.
Had this information been available at the commencement of the
previous Choice exercise, some members may not have elected to
remain in the 1995 section.
In the interests of fairness, those affected are being offered another
opportunity to move their 1995 section membership to the 2008 section
– this is Choice 2
The choice may be advantageous to some members who intend to
retire closer to their new NPA because the 2008 Section has a higher
build up rate.
Who is eligible for Choice 2?
In the interests of fairness, those affected are being offered another
opportunity to move their 1995 section membership to the 2008 section
– this is Choice 2
To be eligible for Choice 2, a member must:
• Be a member of the 1995 section of the current scheme;
• Have tapered protection or no protection.
Eligible members
Members of the 1995 section of the
current NHS Pension Scheme at TEWV
Tapered
protection
=
No protection
Approximately
2,500 members
What is protection?
• Members who were 10 years or less from their normal retirement
age at 1 April 2012 have full protection and will not move into the
new 2015 scheme.
• Members who were between 10 years and 13 years and 5 months
from their normal retirement age at 1 April 2012 will have tapered
protection under the new scheme arrangements and will move to
the new 2015 scheme at some point after 1 April 2015. The date
they move to the new scheme (the length of protection) depends on
their age at 1 April 2012.
• Members who were 13 years and 5 months or more from their
normal retirement age at 1 April 2012 have no protection and will
move to the new 2015 scheme on 1 April 2015.
How Choice 2 is being delivered
• NHS Business Services Authority (NHSBSA) produced personalised
letters for each eligible member during November.
• These letters were passed to your manager for distribution, or sent
by recorded delivery to your home address.
• Online calculator (https://apps.nhsbsa.nhs.uk/choice/index.html) and worked
examples are available to members via the NHS Pensions website.
• An online response form is available on NHS Pensions website
(http://www.nhsbsa.nhs.uk/Pensions/4640.aspx), or a hard copy of the form
can be obtained via the Choices 2 helpline (0300 123 1601) or by emailing nhsbsa.choice2members@nhs.net.
What do members need to do?
• Read your Choice 2 letter in full to understand the implications for
you.
• Make use of the online calculator and examples.
• If a member wants to move their benefits to the 2008 section, they
complete the online response form or request a hard copy from the
helpline.
• The deadline for NHS Pensions to receive Choice 2 decisions is 16
March 2015.
• Once a member has made a decision it cannot be changed.
• Members who decide not to move do not need to do anything – they
will remain in the 1995 section by default.
What else do you need to do?
Additional Resources and Support:
• Choice 2 webpage: http://www.nhsbsa.nhs.uk/Pensions/4640.aspx
• 2015 NHS pension scheme details: NHS Pension Scheme:
Arrangements beyond 1 April 2015
• Trust’s pensions InTouch page:
http://intouch/Services/Corporate/Finance/Pages/Pensions.aspx
• You can email any queries to pensions@nhsemployers.org
2015 NHS Pension Scheme
• Effective 1 April 2015.
• When you retire you will receive 2 pensions.
• Your existing 1995 benefits will be preserved and calculated on the
best of your final 3 years pensionable pay as at when you retire
(provided no break of 5 or more years).
• Accrual rate of 1/54th of pensionable pay.
• No automatic lump sum, however you can choose to fund one by
reducing annual pension (also known as commutation).
2015 NHS Pension Scheme
• Normal retirement age is equal to members state pension age.
• Is a Career Average Revalued Earning (CARE) scheme.
• Prior years membership will be revalued each year for inflation
(currently CPI) + 1.5%.
• An annual pension benefit statement will be made on your total
reward statement – please review for accuracy and contact NHS
Pensions with any queries.
• Employee contribution levels are to remain unchanged until 31
March 2019, apart from a reduction on the Tier 5 boundary (those
paying 12.5%) to £47,846.
2015 NHS Pension Scheme
• Below example assumes pensionable pay of £18,000 per year,
increasing at 1% per annum, and inflation of 0.5% plus 1.5% each
Yearyear.
1
2
3
4
Pensionable Pay
18,000
18,180
18,362
18,545
Pension (1/54)
333
337
340
343
Revalued
(0.5% inflation)
340
343
347
Revalued
(0.5% inflation)
347
350
Revalued
(0.5% inflation)
354
• Total annual pension if retired at the end of year 4 equals:
£354 + £350 + £347 + £343 = £1,394 per annum
2015 NHS Pension Scheme
• There is no MHO status in the 2015 scheme, this ends with the 1995
scheme. Employees with MHO status do not transfer this with them
though a Uniform Accrual calculation at retirement may apply.
• You can still retire and claim your 1995 scheme pension at age 60,
however; you can then no longer contribute to the 2015 scheme. If
you claim your 2015 scheme at aged 60 you will be charged with a
benefit reduction.
• You can contribute an additional sum each month to “buy out” years
of your pension, meaning you can retire from the 2015 scheme up to
3 years before state pension age without penalty. This facility is
known as an Early Retirement Reduction Buy Out (ERRBO).
Related Developments
• An NHS-wide Working Longer Review, in response to the increased
NHS normal pension age, is being undertaken.
• Related guidance, training and information for employers and
employees is to be produced over the next two years to support
changing practice.
• NHS based research is to be undertaken between 2015-17 to
address (i) whether there are links between NHS staff working
longer and performance at work (ii) what changes to employment
policy and practice may be needed to enable staff to safely work for
longer and (iii) what the factors are that influence NHS staff
retirement decisions.
• The Trust is developing its local approach to successfully employing
older workers.