Payroll Services Presenters: David Wilkins & John Hay

1. Payroll ServicesPresenters: David Wilkins & John Hay Payroll, Travel & Pensions Helpdesk 01254 732 014 Email elfs_helpdesk@elht.nhs.uk All Payroll, Travel and Pensions queries will be logged through the Helpdesk. Responses will be quickly provided and dealt with by our team. Website: www.elfsnhs.co.uk ELFS Shared Services, Viscount House, 2nd Floor, Arkwright Court, Commercial Road, Darwen, Lancs. BB3 0FG

2. NHS Pension Contribution • Employer contribution rate 14%

4. Guide to the NHS Pension Scheme Two Sections of the Scheme from 01.04.08 1995 Section – Based on 80ths for scheme members at 31.03.08 & re-entrants with less than 5 years break in membership. 2008 Section – Based on 60ths for all new starters from 01.04.08 & re-entrants with 5 years or more break in membership. Both sections provide index linked pensions Both sections are defined benefits schemes.

5. Membership Eligibility • From ages 16 to 75 • Automatic membership • Choice to Opt out of the scheme (Form SD502) • Overall membership limit, for future service, of 45 years

6. New Employees with NHS service in the last five years • Will automatically rejoin the NHS pension scheme on the terms and conditions that existed prior to 1st April 2008. • If these staff have not already gone through the Pension Choice Exercise with their previous Authority they will be contacted by the Pension Division to make their choice of whether to stay or move across to the 2008 section. • All under 50’s not yet retiring will go through the choice exercise later this year

7. Family Benefits & Life Assurance Are already included in your basic pension contribution. Includes a Death In Service Lump Sum of twice the employees Pensionable Pay. The Lump Sum and Pension is paid to all qualifying partners (i.e. Spouses and nominated partners who are in an exclusive relationship of at least 2 years) Multiple death benefit nominations for death in service lump sum Qualifying partners keep survivor pension even if they remarry or co-habit Child Allowance payable to dependent children.

8. Pension Service Accrual Rate If you work full time you accrue a days service for each day of full time membership If you work part time you accrue service on a pro-rata (scaled) basis for the hours you work 18.75/37.50 for 1 year = 183 days scaled When a part time employee retires the best years pensionable pay at the whole time equivalent rate is used to calculate pension benefits

9. Pension Service Accrual Rate Employee retires after paying into the pension scheme for 30 years (calendar service) but for the last 10 years was working part time ½ standard hours for the grade. Part time pensionable pay best year was £15,000 Service Calculation Calendar ServiceScaled Pro-rata Service 20 years full time = 20 years reckonable 10 years part time (½) = 5 years reckonable Total30 years calendar25 years reckonable Pension based on 25 years pensionable service and whole time equivalent pay of £30,000

10. Accrual Rate (the way you earn your pension and lump sum) 2008 Section • For those joining the scheme for the 1st time after 31st March 2008 • 1/60th final salary scheme based on annual average of best 3 consecutive years pensionable pay, in last 10years, with all years before the last year re-valued by consumer price Index. • Total flexibility to give up part of pension for a tax free lump sum of up to 25% of pension value or keep all as pension

11. NHS Pension Scheme 2008 Section Normal Retirement Age is 65 Voluntary Early Retirement (VER) may be taken at any age from 55 (upwards) - with an Actuarially Reduced Pension subject to Guaranteed Minimum Pension Limits for service pre 5 April 1997 There is no special classes protection in the 2008 section

12. Age Retirement 2008 Section Employee retires at age 65 after 28 years 175 days pensionable membership with a best years pensionable pay of £25,650 Pension £12,175 per annum (£25,650 x 10395 days / 21900 days = £12,175 per annum) There is a basic lump sum based on service prior to 1st April 2008 and there is also the option of increasing your basic lump sum by giving up part of your pension. For every £1 of pension you give up you will receive £12 extra lump sum, subject to HMRC regulations.

13. Early Retirement 2008 Section Employee retires at age 61 after 35 years pensionable membership with a best years pensionable pay of £50,000 Pension £22,750 per annum (£50,000 x 12775 days / 21900 days – 22% = £22,750 per annum) Pension reduced by 22% due to pension being paid before normal retirement age 65. Accrued pension £29,167 – 22% = £22,750 There is a basic lump sum based on service prior to 1st April 2008 and there is also the option of increasing your basic lump sum by giving up part of your pension. For every £1 of pension you give up you will receive £12 extra lump sum, subject to HMRC regulations.

14. Incapacity Retirement 2008 Section Employee age 55 retires after 15 years pensionable membership with a best years pensionable pay of £66,000 Tier1 Pension £16,500 per annum (£66,000 x 5475 days / 21900 days = £16,500 per annum) Tier 2 (Enhancement of 6 years 243 days) Pension £23,832 per annum There is a basic lump sum based on service prior to 1st April 2008 and there is also the option of increasing your basic lump sum by giving up part of your pension. For every £1 of pension you give up you will receive £12 extra lump sum, subject to HMRC regulations.

15. Draw down Retirement 2008 Section To qualify one must Be 55 or over Be reducing actual pensionable pay by at least 10% Have had the previous level of pensionable pay for at least 12 months Expect the new level of pensionable pay to last for at least 12 months Not have already drawn down twice Members can draw between 20% and 80% of their entitlement earned to date whilst continuing to build up further membership. No break in employment is required

16. Draw Down 2008 Section Member aged 58 with 28 years and 45 days service wishing to draw 80% of pension benefits. Pensionable pay = £29876.53 / 21900 x 10265 = £14003.77 Actuarial reduction (7 years) 34% = £9242.48 Annual pension when claiming 80% of benefits = £7393.98 A lump sum based on service before April 2008 would only be paid when a member fully retires.

17. Types of Redundancy Calculations Employee’s with more than 2 years NHS service, who are not members of the NHS Pension Scheme Employee’s with more than 2 years NHS service, who are members of the NHS Pension Scheme, but who are aged under 50 Employee’s with more than 2 years NHS Service, who are NHS Pension Scheme members, but who are aged over 50.

18. Types of Redundancy Calculations Non Pensionable employee’s and Pensionable staff under the age of 50 will be entitled to one month’s pay, for each complete year of reckonable service. This is subject to a maximum of 24 month’s pay. Para 16.7 of Section 16. *One months pay is defined as 1/12th of the annual salary. Under Inland Revenue the first £30k is non taxable, anything over this amount is taxed in the normal PAYE process.

19. Premature Retirement 2008 Section Employee age 55 retires on 31/10/2011 after 14 years 100 days pensionable membership with a best years pensionable pay of £16,753 Pension £3,985 per annum (£16,753 x 5210 days / 21900 days = £3,985 per annum) Lump Sum £5,400 There is a basic lump sum based on service prior to 1st April 2008 and there is also the option of increasing your basic lump sum by giving up part of your pension. For every £1 of pension you give up you will receive £12 extra lump sum, subject to HMRC regulations. Redundancy Pay £ NIL (£1,396 p/mth x 14 years = £19,545 – Capitalisation £33,940 = £0.00) 1 month’s pay per for each complete year of continuous service

20. Ready for Retirement Contact the Payroll section 4 months prior to intended retirement date and request a retirement pack To complete the pack you will need:- Birth, Marriage & Dependents certificates Spouses birth certificate and National Insurance number Agree a finishing date with your manager, inclusive of Annual leave

21. NHS Pension Scheme 1995 Section

22. NHS Pension Scheme 1995 Section Normal Retirement Age is 60 Special Classes can retire at 55 without reduction Voluntary Early Retirement (VER) may be taken at any age from 50 (upwards) - with an Actuarially Reduced Pension subject to Guaranteed Minimum Pension Limits for service pre 5 April 1997

23. Accrual Rate 1995 Section • For those with service in the scheme before 1st April 2008 • 1/80th final salary scheme based on best of last 3years pensionable pay • Automatic fixed tax free lump sum of 3/80ths x service x pensionable pay plus ability to give up part of pension for an increased tax free lump sum up to 25% of pension value

24. Age Retirement 1995 Section Employee retires at age 60 after 28 years 175 days pensionable membership with a best years pensionable pay of £25,650 Pension £9,131 per annum (£25,650 x 10395 days / 29200 days = £9,131 per annum) Lump Sum £27,393 (£25,650 x 10395 days / 29200 days x 3 = £27,393) You have the option to give up some of your pension to get a larger retirement lump sum. For every £1 of pension you give up you will receive £12 extra lump sum, subject to HMRC regulations.

25. Early Retirement 1995 Section Employee retires at age 56 after 35 years pensionable membership with a best years pensionable pay of £50,000 Pension £17,500 per annum (£50,000 x 12775 days / 29200 days – 20% = £17,500 per annum) Pension reduced by 20% due to pension being paid before normal retirement age 60. Accrued pension £21,875 – 20% = £17,500 Lump Sum £57,093 (£50,000 x 12775 days / 29200 days x 3 – 13% = £57,093) Lump Sum reduced by 13% due to being paid before normal retirement age 60. Accrued lump sum £65,625 – 13% = £57,093

26. Incapacity Retirement 1995 Section Employee aged 56 retires after 15 years pensionable membership with a best years pensionable pay of £66,000 Tier1 Pension £12,375 per annum (£66,000 x 5475 days / 29200 days = £12,375 per annum) Lump Sum £37,125 (£66,000 x 5475 days / 29200 days x 3 = £37,125) Tier 2 (Enhancement of 4 years) Pension £15,675 per annum Lump Sum £47,025 You have the option to give up some of your pension to get a larger retirement lump sum. For every £1 of pension you give up you will receive £12 extra lump sum, subject to HMRC regulations.

27. Types of Redundancy Calculations Employee’s with more than 2 years NHS service, who are not members of the NHS Pension Scheme Employee’s with more than 2 years NHS service, who are members of the NHS Pension Scheme, but who are aged under 50 Employee’s with more than 2 years NHS Service, who are NHS Pension Scheme members, but who are aged over 50.

28. Types of Redundancy Calculations Non Pensionable employee’s and Pensionable staff under the age of 50 will be entitled to one month’s pay, for each complete year of reckonable service. This is subject to a maximum of 24 month’s pay. Para 16.7 of Section 16. *One months pay is defined as 1/12th of the annual salary. Under Inland Revenue the first £30k is non taxable, anything over this amount is taxed in the normal PAYE process.

29. Redundancy Calculation Option. Receive the Redundancy package of 1 month’s pay per year’s continuous service – less the cost to the Trust of an Assisted VER. (Para 16.13) Plus An NHS Pension based upon your service at termination – without any actuarial reduction

30. Premature Retirement 1995 Section Employee age 58 retires on 31/10/2011 after 37 years 174 days pensionable membership with a best years pensionable pay of £54,714 Pension £25,631 per annum (£54,714 x 13679 days / 29200 days = £25,631 per annum) Lump Sum £76,893 (£54,714 x 13679 days / 29200 days x 3 = £76,893) You have the option to give up some of your pension to get a larger retirement lump sum. For every £1 of pension you give up you will receive £12 extra lump sum, subject to HMRC regulations. Redundancy Pay £51,523 (£4,559 p/mth x 24 years = £109,416 – Capitalisation £57,893 = £51,523) 1 month’s pay per for each complete year of continuous service

31. Ready for Retirement Contact the Payroll section 4 months prior to intended retirement date and request a retirement pack To complete the pack you will need:- Birth, Marriage & Dependents certificates Spouses birth certificate and National Insurance number Agree a finishing date with your manager, inclusive of Annual leave

32. Ready for Retirement • If a retiring member has not already gone through the Pension Choice Exercise the can request a pension estimate to be sent with the application form • However employees will also be sent a Pensions Choice Exercise Option Form. • If the employee is happy to remain in the 1995 section they should choose Option “No” and benefits will be paid as per the 1995 section. No Pension Choice Exercise will be entered into. (This decision is final and cannot be reversed) • If they choose “Yes” they will be sent a Pensions Choice Pack from the NHS Pensions with comparisons of their own personal benefits in both sections at various age points and a final option form to choose whether to move sections or not

33. Returning to work after NHS retirement • Take one calendar days break • Work less than 16 hours per week for a calendar month • Re-employed staff under the age of 60 will be subject to the ‘abatement rule, where earnings in the new post plus pension must not exceed pre retirement earnings • Re-employed staff over the age of 60 are not subject to the abatement rule

34. Returning to work after NHS retirement. • If retiring from 1995 Section you cannot rejoin the NHS Pension Scheme • Will only receive one part of their P45 on leaving

35. Pension Information NHS Pensions website is an excellent source of information on the scheme www.nhsbsa.nhs.uk/pensions If you are in any doubt which Pension arrangement will be best for you, you should seek Independent Financial Advice Employee’s who have FSAVC’s should contact their provider for information

36. Compulsory Transfer of employment (TUPE) elsewhere in the NHS NHS Pension Scheme membership will continue and you will continue to accrue pensionable service with your new employer If you have not made your NHS Pension CHOICE prior to transfer this will be arranged by your new employer once the CHOICE Tranch commences in their region

37. Compulsory Transfer of employment (TUPE) outside the NHS If you have not made your NHS Pension CHOICE prior to transfer you will need to request your CHOICE information prior to transfer After you transfer of employment:- Decide whether to join new employer pension Decide whether to transfer your NHS pension to your new pension provider or leave preserved (frozen) in the NHS Pension Scheme for payment at 60 or 65

38. Any Questions?