NHS Pension Scheme – Proposed Changes

NHS-Pension-AgencyThe Government has announced that new pension arrangements are to be introduced into all public sector pension schemes including the NHS Scheme from 1st April 2015.

Much of the detail is still being worked out but the main features of the new arrangement include:

  • A Career Average Revalued Earnings (CARE) scheme, with benefits based on a proportion of pensionable earnings during your career
  • An accrual rate (ie the rate that your pension builds up) of 1/54th of each year’s pensionable earnings with no limit on pensionable service. This is a higher accrual rate than both the 1995 and 2008 sections of the NHS Scheme
  • Revaluation of active members’ benefits in line with the Consumer Price Index (CPI) plus 1.5 percent per annum
  • A normal pension age at which benefits can be claimed without reduction for early payment linked to the same age as you are entitled to claim your State Pension
  • Pensions in payment to remain in line with inflation (measured using CPI).

These changes will result in lower benefits for NHS staff than was the case in the previous versions of the scheme due to the introduction of career average earnings, the increase to the normal pension age and the increase in costs.

It is vitally important, therefore, that all available top up options are explored. However you should not opt of the NHS scheme if it can be prevented as it still will remain one of the most generous pension schemes in the UK.