Health & Social Care (HSC) Pension Scheme 2015

This leaflet explains thenew arrangementsfrom 1st April 2015

This leaflet is intended as a guide to all healthcare workers who are members of the HSC Pension Scheme.

Up until 1st April 2015, the Health and Social Care Pension Service administered 2 sections of the Health and Social Care Pension scheme; namely, the 1995 section and the 2008 section.

On 1st April 2015, the new Health and Social Care Pension Scheme 2015 was introduced. This leaflet is intended to help communicate those changes so you can determineif you are affected by them and if so, what the changeswill mean for you.

HSC Pension Service has a dedicated website that can be accessed from any personal computer outside of the HSC network.

www.hscpensions.hscni.net

For alternative contact details, please refer to the last page of this leaflet.

1 What has changed?

2 What is a CARE Scheme?

3 Who can join?

4 Retirement Age

5 Protection

6 Service Breaks

7 Pre 2015 Service

8 Estimates of Benefits 9 Summary of Changes

CONTENTS

1. What has changed?On 8 March 2012 the NI Executive agreed:• tocommittothepolicyforanewcareeraveragerevalued earnings(CARE)schememodelwithpensionagelinkedtoStatePensionAge.• toadoptthisapproachconsistentlyforeachofthedifferentpublicsector pensionschemesinlinewiththeirequivalentschemesinGreatBritain.

ThePublicServicePensionsAct(NorthernIreland)2014providesthewiderlegalframeworkforreformstotheHealthandSocialCarePensionScheme.TheDepartmentofHealth,SocialServices&PublicSafety(DHSSPS)haspowersunderthisActtomakeregulationsthatprovideanewpensionschemeforHSCstaff.

TheDHSSPSranapublicconsultationontheNewSchemeProposalsfromSeptember2014toNovember2014.Followingtheconsultationthenew2015Schemewasintroducedon01/04/2015.

On01/04/2015mostmembersofthe1995&2008sectionsoftheHSCPensionSchememovedtothenewHSCPensionScheme2015.Furtherinformationonwhomovedtothenewschemecanbefoundinthe“Protection”sectionofthisleaflet.

2. What is a CARE Scheme?Career Average Revalued EarningsCAREisadefinedbenefitpensionschemewhichguaranteesacertainlevelofbenefitatretirement.Apensioniscalculatedusingafractionofpensionablepaythroughoutmembershipofthescheme.

What is different?There are now 2 schemes.

TheHSCPensionSchemeandtheHSCPensionScheme2015TheHSC Pension Schemehastwosections:• 1995 Section—FinalSalarySchemewhichcalculatesbenefitsbasedonthe bestofthelast3yearspensionablepayandreckonableserviceaccrued.• 2008 Section—FinalSalarySchemewhichcalculatesbenefitsbasedonanaverageofthebest3consecutiveyearsreckonablepayinthelasttenyearsand reckonableserviceaccrued.TheHSC Pension Scheme 2015-Benefitsarecalculatedonanannualbasisusingpensionablepaythroughoutthemember’sHSCcareer.Benefitsearnedeachyeararethenrevaluedbyasetrate.

What is the Revaluation Rate?Therevaluationrateusedtore-calculatethevalueofmemberbenefitsinthe2015schemeisbasedontheConsumerPriceIndex(CPI)+1.5%.TheCPIfactorisbasedontheofficialmeasureofinflationofconsumerpricesintheUnitedKingdom.

How are Benefits Earned and Re-valued in the CARE Scheme?Benefitsearnedonayearlybasisarecalculatedas1/54thofthememberspensionablepay.Forexample:ifamember’spensionablepayis£20,000peryeartheirbenefitearnedis:£20,000/54=£370.Thisamountisthenre-valuedeachyear(increasedtotakeaccountofinflation)untilthememberretiresorleavesusingtheConsumerPriceIndex(CPI)plus1.5%.Forillustrationpurposes,therevaluationamountusedinthisexampleis3.5%(2%CPI+1.5%).Thepensionof£370earnedinyear1isnowre-valuedby3.5%asfollows:£370x3.5%=£13togiveapensionof£383atthestartofyear2.Thisrevaluationprocedurecontinuesuntilthememberretiresorleaves.

The Table below illustrates how the members pension will build up over a 5 year period. For illustration purposes the pension has been revalued at a rate of 3.5%.

Asyoucanseethefirstyear’spensiongets4yearsofrevaluation,thesecondgets3yearsandsoonuntilthefinalyearwhichneedsnorevaluation.Addingalltheseyearstogethergivesatotalannualpensionof£2,177.89

Please note:Anymemberenteringinto,orcontinuingwithasalary sacrifice arrangementthatreducestheirgrosspensionableearningsshouldbeawarethatthiswillhaveanegativeeffectontheamountofpensiontheycanbuildupinthatyear.

PensionablePay

Year 1Salary

£20,000

Year 2Salary

£21,000

Year 3Salary

£22,000

Year 4Salary

£23,000

Year 5Salary

£24,000

Revalued Pension

£370.37 £383.33 £396.75 £410.64

£388.89 £402.50 £416.59

£407.41 £421.67

£425.93

Year 5Value

£444.44

Year 4 Valueat end of 1Yr

£440.84

No revaluation 1yearsrevaluation

2 yearsrevaluation

3 yearsrevaluation

4 yearsrevaluation

Year 3 Valueat end of 2Yrs

£436.43

Year 2 Valueat end of 3Yrs

£431.17

Year 1 Valueat end of 4Yrs

£425.01

3. Who can join ?All Health and Social Care workers who are:

• Agedbetween16&75

• Notentitledtocontinuemembershipofthe1995or2008Sections

• Notinreceiptofpensionbenefitsfromthe1995section(thereareafew

exceptionstothisrule)

4. Retirement AgeIntheHSCPensionScheme,theNormalRetirementAge(NRA)inthe1995sectionof

theSchemeisage60(Age55forSpecialClassMembers).

TheNRAinthe2008sectionoftheSchemeisage65.

IntheHSCPensionScheme2015,theNRAformembersislinkedtothemembers

StatePensionAge(SPA).MemberscanfindtheirSPAbyvisitingtheGovernment

websiteatwww.gov.uk/calculate-state-pension.

5. Protection• Thosememberswhoat01/04/2012werewithin10yearsoftheirNRAunder

theircurrentarrangementswillnotmovetothenewscheme.Theyremainin

theircurrentsectionoftheHSCPensionScheme,onFullProtection.

• Membersat01/04/2012withmorethan10yearsbutlessthan13years5

monthsuntiltheirNRAwouldbeabletocontinuetoaccruebenefitsintheir

existingschemeforalimitedperiod.ThisisknownasTaperedProtection.

• ProtectionstatuscanbelostifamemberleavesHSCemploymentorthe

schemeonorafter01April2012anddoesnotre-joinwithin5years.

1995 Section Special Class memberFullProtectionifthememberwas45yearsorolderat01April2012.

1995 Section Normal memberFullProtectionifthememberwas50yearsorolderon01April2012.

2008 Section memberFullProtectionifthememberwas55yearsorolderon01April2012.

What does Tapered Protection mean?AmemberwithTaperedProtectionwillnotjointhenew2015schemeon

01/04/2015butwilldosofromadatethereafterdeterminedbytheirageinyears

andmonthsat01April2012.Thesememberswillcontinuetoaccruebenefitsunder

thecurrentSchemeRegulationsfortheperiodbeyond01/04/2015untiltheyjointhe

newScheme.

How is the Tapered Protection period calculated?TaperedProtectionisbasedonhowmanymonthsbeyond10yearsamemberis

awayfromretirementat01/04/2012.

Foreachmonthbeyond10yearstheTaperedProtectionperiodisreducedby2

months.TheperiodofTaperedProtectionrangesfrom2monthsto6years10

monthsfrom01/04/2015.

Calculators for working out if you are entitled to Tapered Protection and your

potential transfer date to the new scheme can be found on the HSC Pension

Service website at: www.hscpensions.hscni.net.

6. Service BreaksPeriodsofmembershipinthe2015Schemecanbelinkedprovidingthereisnota

breakinserviceofmorethan5years.

Wherethereisalinkinmembership,anypensionbenefitsaccruedfrombeforethe

breakwillberevaluedinlinewithcontinuousmembership,currentlybyCPI+1.5%.

Service Break of more than 5 yearsAnypensionearnedpriortothebreakbecomesdeferred(providingitissufficientto

qualifyforpensionbenefits).

Atretirementthesebenefitsarerevaluedbyapensionsincreasefactorwhichis

currentlylinkedtoCPIandthereforelessthanthein-schemerevaluation.

7. Pre 2015 ServiceThesebenefitswillnotbeaffected.Youwillstillbeabletoaccessthemonafinal

salarybasisatyourcurrentNRAinthe1995/2008SectionsoftheScheme

(at55,60or65asappropriate)ifyoucontinueyourmembershipoftheHSCPension

Schemeuntilyouretire.

Toaccessyourbenefits,youwillneedtoretirefromyourcurrentpost.

Youcanclaimyour2015benefitsatareducedrateordeferthemuntilyoureach

SPA.IfyoudecidetoreturntoHSCemploymentafteraccessingyourbenefits,there

areanumberofrulesaboutwhetheryoucanbuildupmorebenefitsinthe2015

Scheme.

MoreinformationcanbefoundontheHSCPensionServicewebsite

www.hscpensions.hscni.net.

8. Estimates of Benefits AccruedAsHSCPensionServicecannolongerpredictfutureearnings,pensionestimates

forthosethatarenotprotectedorwithin5yearsofleavingcannotbeprovided.HSC

PensionServicehoweverwillbeprovidingAnnualBenefitStatementsfrom2016.

9. Summary of Changes• PensionBenefitsinthe2015SchemearecalculatedusingtheCAREmethod.

• Retirementageinthe2015SchemeislinkedtoamembersSPA.

• Currentmembersofthe1995or2008SectionsofSchemeneartheirNRAare

protectedfromtheschemechanges.

• Benefitsaccruedunderthe1995/2008SectionsoftheSchemecanbe

accessedatthemembersNRAforthatsection(age55,60or65).

CARE - Career Average Revalued Earnings CAREisadefinedbenefitpensionschemewhichguaranteesacertainlevelof

benefitatretirement.Apensioniscalculatedusingafractionofpensionablepay

throughoutmembershipofthescheme.

Consumer Price Index (CPI) ThemeasureofinflationbasedonchangestoconsumerpricesintheUnited

Kingdom.

Pensionable Pay Theamountofyourpaythatisusedtocalculatetheamountofcontributionsyou

payandtheamountofpensionyoubuildupineachyear.

Protection Protectionisthearrangementwherebycertainmemberswillremainintheir

currentsectionoftheHSCPensionSchemebeyond31stMarch2015.

Revaluation Aformulabasedoninflation(currentlyCPI)plus1.5%bywhichthevalueof

eachyear’spensionisincreased.

Regulations ThelegalframeworkthatsetsouttherulesoftheScheme.

Salary Sacrifice Anarrangementwithyouremployertoprovidebenefitssuchaschildcare

vouchers,aleasecaretc.inreturnforgivingupsomepaybeforetax,National

Insuranceandpensionschemecontributions.

State Pension ApensionpaidbytheGovernmentwhenyoureachStatePensionAgebasedon

yourNationalInsurancerecord.

GLOSSARY OF TERMS

Where can I get further information?FurtherinformationcanbefoundontheHSCPensionServicewebsite.

Thereisadedicatedsectionofthewebsitewhichdealswithadditionalfeatures

ofthe2015Schemeandincludesfactsheets,frequentlyaskedquestionsand

calculators.

The Small PrintThisleafletisintendedtoprovideyouwithageneraloverviewoftheScheme

Benefits.Wehavetakengreatcaretogetthedetailsrightatthetimeofpublication

butitdoesnotgiveacompleteorlegallybindingstatementofthelawand

regulationswhichgoverntheScheme.Nothinginthisleafletcanoverridethe

Regulationswhichsetouttheconditionsofentitlementanddeterminetherate

atwhichbenefitsarepayable.Intheeventofanyconflictinginformation,the

Regulationswillprevail.

HSC Pension ServiceWaterside House

75 Duke StLondonderry

BT47 6FP

028 71319111