NHS Pension Scheme Review
Building up your Pension
16th June – London
1. What should constitute a full career for pension purposes?
· Not that many exceed 40 years apart from MHOs and there is no affect to under 40
q Full Career – No maximum ceilings
q Following discussion 1/60th – Depends if it would be more flexible – circumstances
· This is an “old” model
· Retention issue – particularly older workforce
· This has to change – Inland Revenue rules, age discrimination, Model ER
q Trends - Not likely to achieve “40 years” from just unbroken employment. Other forms to gain a full career pension
q Take into account? Widen scope:-
- Career Breaks. Based on reasons fee + will return
- Ability to pay extra at different stages in career
- Have incentives for loyalty e.g 10,20,30 years
- Move away from a finish date by allowing those receiving benefits to rejoin
- Establish “core years” that count more towards benefits
- Move away from “years” to credits for contributions paid
- Higher education breaks cost less to repay
- Not limited on end age – based on capability
· How many years. Target 30 – more people
· 15 years of flexibility – higher 30 of 40 no detriment clause
- Flexibility
- Part time
- Reduced hours
- Winding down
· Thank you for including Special Case for early retirement Ambulance Staff on the slides
q No such thing
· Will the 15% rule also move the 40 years limit?
· Student nurses etc train for 3 years non-pensionable can they be given credit for this service as non-contributory
q This should be based on actual service i.e start at 16 retire at 65 = 49
80th
· 22 more like the start age after educatrion/training
· Won’t work full time for 40 years
q Every year / day counts to pensions scheme there is no bonus for getting 40 years service
q Why is it restricted to 40 years at age 60?
q When 40 years achieved – let them take benefits in full
2. Should there be more flexibility in the payment of a pension ad lump sum? Should we be looking to improve accrual rates? E.g to 1/60ths
· Vision for the engagement of the older workforce
· The age limits already in place are hindering workforce development. Should access to the scheme be available for any age of the staff employed? Re-employment issues
· Flexibility in taking their pension
· I.W.L – Link. Can a pension scheme be tailored to meet members individual circumstances
· Issue Re: Dependence (survivor) New members amount (personal choice)
· Step down / wind down – Survivor benefit guarantee. 5 – 10 year rule. 5 year rule refundable.
· AVC – Additional Voluntary Contributions. Removal of that ceiling. More flexibility in the scheme.
q Yes, employees should have the choice to choose lump sum / pension depending on their circumstances. May aid recruitment of individuals from private sector as perceive 1/80ths as worse. Ensuring lump sum remains tax free. Flexibility to allow individual to decide how much pension to commute to a lump sum.
q Yes, improve accrual rates, to a certain extent individuals compare schemes by this, perception sometimes that lower accrual figure equates to a better scheme.
q Give this flexibility to AVCs/added years
· Yes, more choice should be available
· If this proves more expensive, how is this going to be paid for.
q Choice at retirement
q Annual benefit statements! Defining different estimates for each option. Provided by the Pensions Agency – not employer
· Agree would be an attractive option if both 60ths and 80ths available
q Yes, it should be more flexible
q Options should be available
q If too many options it will be too complicated and confusing – admin?
· It would be good to have an element of choice
q Good for employees to have a choice
3. Should we consider basing benefits in future on career average rather than final salary? Would that be conditional on re-investing any net saving?
· Can’t see benefits for anyone other than GPs
· Like the idea of a larger reference period for the best year of service
q Do the two calculations career average / final salary and the employee gets the best option for them
· Would suit some grades i.e X-ray, pathology, doctors, consultants, nurses – bank work
· Would not suit admin staff
· If final salary – everything would need to be pensionable – Cost to employee and employer
q Will it be one scheme only or will employees have a choice
q Will the decision have to be made on joining or can you change your mind at a later date.
q Will existing staff have a choice on joining or will it be imposed on a certain date if just one scheme. We think that existing staff should have a choice.
q Would be a benefit if people reduce working hours towards end of career
q We think it would be more beneficial to improving accrual rates. We think this would benefit everyone
· It would be difficult to decide whether this would be a fairer system. We would need to see the modelling to be able to make a valued judgement. On the whole it may be beneficial for the majority of staff however medical staff would be a group who would be greatly affected. Medical staff start off at House Officer level and end their careers at consultant level which can be up to six times their starting salary
· Need to have clear guidance that is easy for members to understand.
q No, too much like a money purchase scheme
· GPs – why not preserve benefits at end of their peak period
· Excessive workload for Pensions Officers!
q Should be considered – detailed modelling needed
q Difficult to explain to staff
q Who will provide the annual statement?
q Have to convince staff it’s a good deal
q Extra cost to employer if overtime made pensionable
q Will this be affected by the economy
q No incentive for career minded employees
· ES – Could be an advantage
· Some – maybe a minority – ASC Staff? – Overtime Issue
· Look at reference period (final salary) – beyond three years if its very generous no need for career average!
· Preserve pay – option use – Link to flexible retirement
· Allow for flexible retirement
· Any savings go back to members (not to fund career breaks)
q For Average:-
Annual Benefit statement
Communication Improvement
IWL Link
Career Breaks
Lower grade job
Better for who – period workers
Bank staff – working flexible hours
Linking increases to RPI
Index linked scheme
Would you need the deeming element to be in this
q Against Average
Promotions late in their careers
Higher earnings could lose out – admin
Complex to explain to members
A particular group of members may be very against changing from a final salary
Could be an influential group
Affordability of the lower period. Overtime issues etc
4. What principles should govern scheme coverage?
· Need to define core NHS Services e.g would we exclude “services” such as gardening?
· Need to consider effects of NHS staff moving to and from non NHS employment but continuing to provide NHS services.
· Generally agreed to be a good idea due to increased flexibility
· Attraction for staff recruitment and retention
q Boundaries – Private Hospitals, Agency staff
q Concern that costs could escalate
q NHS scheme could attract staff to a private company
· No to expansion of membership
· Retention of organisations applying for directions eg Clarities + non profiting
· Query, harmonising with other public sector organisations
q Directions: Fine
q Changes in earning would/could reduce therefore lower final salary/benefit
q Control of scheme/responsibility
q Cost of employers controls
q Who would pick up the cost
· Where do you draw the line?
· Pension scheme should be used for recruitment and retention for staff who work and paid by the NHS
q If working in a similar role to that of an NHS role than feel should still be able to be in the scheme
· Public sector employees moving from scheme to scheme
· We feel that if employees of private contractors, PFIs etc if they are included because they work within/ do NHS work then that contractor/company must pay and honour the costs of ees conts, capitalisation costs for ill health, supported VERs, Redundancy cover, injury benefits etc the same as a Trust has to
· Monitoring the staff employed by the non-NHS employer. What if they have people who have moved around within the company’s organisation. What if employers would say that they can offer the full NHS pension package even though no Trust/PCT etc employ them
· Why should over pension be given to outside employers to use ie agency staff etc the agency will be charging the NHS much more than to employ that individual than if the individual joined the NHS.
· We think admin costs will be extremely high
· We believe it should be very instructed to outside. We agree with hospices
· What would happen if the employer had a takeover or decided to pull out and sell to some other company?
· Include private hospital beds and nursing if the employees on the NHS payroll
· Why should the NHS lose Drs recruitment tool?
5. Should we use the scheme to subsidise career breaks?
· No
· We think its good in principle but why not extend sabatical leave to 2-3 years and the Trust honour the ers conts
q Have a sliding scale for the career break period for the employer to make their contributions. I.e employee comes back within 12 months, employer pays 80%
q Take employee’s /employer’s contribution from the lump sum
q Employee could contribute to AVCs during career break
· Incentive to retain staff – employer allowing the break to be included into the scheme
· The person on the career break must pay their own contributions
· Redundancy situations – offer a career break to staff rather than redundancy – paying the contribution to help ease the situation
· What would happen if you were in an Average salary scheme
q Length of career break – re-pay conts
q Back over same period – admin easier to control
q EES +ERS Conts to be paid by EE?
q EES Pay conts? ERS pay conts?
q No career break. Leave and then return
q No to go off year – would rather credit EES with cont service i.e after 20 years 1 free, 30 years 1 free, 40 years 1 free
· No
q No – Employee pays own contributions. Employer also pays contributions but flexible recovery period
· Mat leave type of career break
· Conts unpaid leave based on SMP £100PW instead of pay before mat leave period. Is this fair?
q Looking @ individual cases
q Who would meet the costs
q Stay for period of time
q How would career break for career average scheme
q Help retention