NHS Pension Choice Exercise
Tuesday, October 6, 2009
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From Paul Gordon of www.MacArthurGordon.co.uk
The NHS Choice Exercise is here if you are intending on retiring between 1st October and the 31st December. All others over the age of 50 as at the 1st October 2009 will receive their Choice Pack in 2010.
Every member of the Old or 1995 Section will be given the option of making a one-way switch to the New or 2008 Section. Once you have decided to switch you cannot reverse the decision and all service will be transferred accordingly.
If you joined the NHS Pension before the 1st April 2008, you will currently be a member of the 1995 Section with a Normal Retirement Age of 60, an automatic entitlement to a pension of 1.4% of you Total Pensionable Pay and a one off lump sum of three times the pension.
The 2008 Section has a Normal Retirement Age of 65, a higher accrual rate of 1.87% but no automatic entitlement to a lump sum, although income can be commuted at a ratio of £1 for £12 of lump sum.
If you are under 50 on the 1st October 2009 you will receive your pack in 2011 although regardless of timing, the choice you make will be backdated to the 1st April 2008.
Other Issues
There are other aspects of the 2008 Section which could be advantageous to members. These are:
it offers more flexibility in your choice between tax free cash and pension
it gives more flexibility in allowing you to take some benefits whilst still working and building up pension
it could deliver higher benefits if you were to retire in serious ill-health
it offers higher partners pensions to members who joined before 1988 and have a long term partner other than a wife
There are also aspects that could be detrimental and perhaps the most important of all is the age at which you plan to retire. Your benefits in the 1995 Section are paid unreduced from age 60. This applies both to the benefits you have already built up and those you build up in the future. If you transfer benefits to the 2008 Section and still retire at 60, and take the same lump sum as in the 1995 Section, your pension could be almost a quarter lower. So those retiring at 60 may not benefit from transferring.
In order to make a choice it is important you understand the implications of each option and ensure your individual circumstances are taken into account.
The NHS Choice Exercise is here if you are intending on retiring between 1st October and the 31st December. All others over the age of 50 as at the 1st October 2009 will receive their Choice Pack in 2010.
Every member of the Old or 1995 Section will be given the option of making a one-way switch to the New or 2008 Section. Once you have decided to switch you cannot reverse the decision and all service will be transferred accordingly.
If you joined the NHS Pension before the 1st April 2008, you will currently be a member of the 1995 Section with a Normal Retirement Age of 60, an automatic entitlement to a pension of 1.4% of you Total Pensionable Pay and a one off lump sum of three times the pension.
The 2008 Section has a Normal Retirement Age of 65, a higher accrual rate of 1.87% but no automatic entitlement to a lump sum, although income can be commuted at a ratio of £1 for £12 of lump sum.
If you are under 50 on the 1st October 2009 you will receive your pack in 2011 although regardless of timing, the choice you make will be backdated to the 1st April 2008.
Other Issues
There are other aspects of the 2008 Section which could be advantageous to members. These are:
it offers more flexibility in your choice between tax free cash and pension
it gives more flexibility in allowing you to take some benefits whilst still working and building up pension
it could deliver higher benefits if you were to retire in serious ill-health
it offers higher partners pensions to members who joined before 1988 and have a long term partner other than a wife
There are also aspects that could be detrimental and perhaps the most important of all is the age at which you plan to retire. Your benefits in the 1995 Section are paid unreduced from age 60. This applies both to the benefits you have already built up and those you build up in the future. If you transfer benefits to the 2008 Section and still retire at 60, and take the same lump sum as in the 1995 Section, your pension could be almost a quarter lower. So those retiring at 60 may not benefit from transferring.
In order to make a choice it is important you understand the implications of each option and ensure your individual circumstances are taken into account.
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