NEW - Powerpoint template - NHS Employers

NEW - Powerpoint template - NHS Employers

NHS Pension Scheme The value of membership The full ten-point agenda 1. An overview 2. How much does the scheme cost 3. How your pension builds up 4. Keeping track of your pension 5. Protection benefits 6. Leaving the scheme 7. Retiring from the scheme 8. Saving enough to stop work 9. Ways to increase your benefits 10.Pensions tax 1. An overview A benefit scheme for employers, members and their dependants Cost is shared Benefits for you You pay in Income tax payers get tax relief Payable on healthy retirement

Pension payable for life Your employer pays in too or in ill-health Tax-free cash Life cover when in service Protection for others Benefits for adult dependants and children 2. How much does the scheme cost? Your payslip Costs are shared between members and employers FULL TIMERS Tier Whole-Time Equivalent Pensionable Pay

Member rate 1 0 to 15,431 5.0% 2 15,432 to 21,477 5.6% 3 21,478 to 26,823 7.1% 4 26,824 to 47,845 9.3% 5 47,846 to 70,630

12.5% 6 70,631 to 111,376 13.5% 7 111,377 and over 14.5% Employer rate 14.3% + 0.08% admin levy Costs are shared between members and employers PART TIMERS E.g. pay of someone working 50% of full time hours: 0 up to 7,716 Their WholeTime Equivalent Pensionable Pay

Member rate 0 to 15,431 5.0% 7,716 up to 10,739 15,432 to 21,477 5.6% 10,739 up to 13412 21,478 to 26,823 7.1% 14.3% 13,412 up to 23923 26,824 to 47,845 9.3% + 0.08% admin levy

23,923 up to 35,315 47,846 to 70,630 12.5% 35,316 up to 55,688 70,631 to 111,376 13.5% 55,689 and over 111,377 and over 14.5% Employer rate The taxman helps you save too (2017/18) Income tax bands for all England & Wales (not just NHS staff!) 11500 33500 20% tax

No tax e.g. 40,000 gross pay 105000 30000 The taxman helps you save too (2017/18) Income tax bands for all England & Wales (not just NHS staff!) 11500 33500 105000 40% tax 20% tax No tax e.g. 80,000 gross pay 30000

The taxman helps you save too (2017/18) Income tax bands for all England & Wales (not just NHS staff!) 11500 33500 105000 30000 How tax relief works (for every 1 you pay into the scheme) Yearly income Yearly income* * under 11,500pa to 11,50 45,000pa 0pa Tax Tax relief 20p relief 0 You pay 1 You pay 80p

Yearly income* 45,000pa to 150,000pa Yearly income* over 150,000pa Tax relief 40p You pay 60p Tax relief 45p You pay 55p By paying into the scheme, you pay less tax *(2017/ Example pay slip Annual pay of 20,000 Monthly pay slip Not in scheme (2017/18) In the scheme Gross pay

1,667 1,667 Pension (5.6%) - (94) Income tax (142) (123) National Insurance (118) (118) Giving you a gross 1,332 pension in the 2015 370 Scheme

paid of.. Over the Over the Take-home year, 1,407 year, pay your you will employer give up will pay 900 2,860 in takehome towards your retiremen every year for Your total pension

contribution is 94 But youve paid 19 less tax And your employer paid in 238 If you receive this for around 3 years, youve made your money back! Example pay slip Annual pay of 25,000 Monthly pay slip Not in scheme (2017/18) In the scheme Gross pay 2,083 2,083

Pension (7.1%) - (148) Income tax (225) (195) National Insurance (168) (168) Giving you a gross 1,572 pension in the 2015 463 Scheme paid of..

Over the Over the Take-home year, 1,690 year, pay your you will employer give up will pay 1,420 3,575 in takehome towards your retiremen every year for Your total pension contribution is 148 But youve paid

30 less tax And your employer paid in 298 If you receive this for around 4 years, youve made your money back! Example pay slip Annual pay of 40,000 Monthly pay slip Not in scheme (2017/18) In the scheme Gross pay 3,333 3,333 Pension (9.3%)

- (310) Income tax (475) (413) National Insurance (318) (318) Giving you a gross 2,292 pension in the 2015 740 Scheme paid of.. Over the Over the

Take-home year, 2,540 year, pay your you will employer give up will pay 2,976 5,720 in takehome towards your retiremen every year for Your total pension contribution is 310 But youve paid 62 less tax And your employer

paid in 477 If you receive this for around 5 years, youve made your money back! 3. How your pension builds up Guaranteed income in retirement based on your pay Old sche me Final Salar y NHS Pensio n Schem es New sche me Career Averag

e Career Average pensions Your pension builds up in slices, using your pay in every year Total pension at the end ofyour c After year 1 After year 2 After year 3 Uses pay in year 1 Uses pay in year 2 Uses pay in year 3 Uses average pay across whole career At retirement your pension is paid every year, for life Pension paid in year 1

Pension paid Pension paid Pension paid Pension paid Pension paid Pension paid in year 3 in year 4 in year 6 in year 7 & on in year 2 in year 5 Final Salary pensions Your pension builds up in slices, using your pay near the end of each year After year 1 Uses Final Salary at end of year 1 After year 2 Uses Final Salary at end of year 2 After year 3 Total pension at the end of your car Uses Final Salary at end of year 3 Uses Final Salary at

retirement (or earlier leaving) At retirement your pension is paid every year, for life Pension paid in year 1 Pension paid Pension paid Pension paid Pension paid Pension paid Pension paid in year 3 in year 4 in year 6 in year 7 & on in year 2 in year 5 How much pension builds up? 1995 Section (Example using pay of 20,000 pa) Benefit structure Pay used Pension as proportion of pay 1995 Section Best of last 3 years pay

1/80th or 1.25% One off lump sum at retirement 3 pension Normal Pension Age 60 Benefits built up in 1 year 1.25% of pay = 250 per year 750 lump sum Benefits built up in 20 years 1.25% x 20 x pay = 5,000 per year

15,000 lump sum But can give up some (more) pension for cash Pension amount does not depend on any investment performance How much pension builds up? 2008 Section (Example using pay of 20,000 pa) Benefit structure 2008 Section Benefits built up in 1 year Best 3 year average from last 10 1/60th or 1.67% 1.67% of pay = 334 per year

One off lump sum at retirement Nil Nil Normal Pension Age 65 Pay used Pension as proportion of pay Benefits built up in 20 years 1.67% x 20 x pay = 6,680 per year Nil But can give up some pension for cash Pension amount does not depend on any investment performance

How much pension builds up? 2015 Section (Example using pay of 20,000 pa) Benefit structure Pay used Pension as proportion of pay One off lump sum at retirement Normal Pension Age 2015 Section Benefits built up in 1 year Pensionabl e pay over career 1/54th or 1.85% 1.85% of pay = 370 per

year Nil Nil Benefits built up in 20 years 1.85% x 20 x pay = 7,400 per year Nil But can give up some pension for cash State Pension Age (65+) Pension amount does not depend on any investment performance 4. Keeping track of your pension How do you know what youve got? www.totalrewardstatements.nhs.uk Your pension payable from Normal

Pension Age A guide to how much your pension would cost to buy from an insurance company Total reward, including employer pension contributions 5. Family benefits Benefits for dependants Family benefits in the NHS Pension Scheme Leave In active service Pension Retire In deferment In retirement Payable to spouse/partner for the rest of their life And dependent children (generally

until age 23) Increased pension if member dies in active service Life assuranc e lump sum Most significant lump sum is paid when death is in active Broadly thisservice is 2 times yearly pensionable pay 6. Leaving the scheme Leaving the scheme Join the sche me 2 years servic

e Leave with less than 2 years service Receive a refund of YOUR contribution s (less tax) Retirem ent age Leave with more than 2 years service Your pension stays in the scheme Inflatio n protect ion Payable from

retirem ent age 7. Retiring from the scheme Drawing your pension 1995 Section Norma l Pensio n Age Retirin g early (not VR) Retirin g late (max age 75) 60 2008 Section 2015 Scheme

65 State Pension Age Between 65 & 68 Your pension starts at a lower amount as paid earlier and for longer From 55 (or 50 if joined From 55 From 55 before Maximum 45 Maximum 06/04/2006) years No maximum 45 years service service service No increase for retiring Pension increased for retiring

Pension increased for retiring late Choosing benefits at retirement Example 2015 Scheme OR give up some pension for tax-free cash Take a full pension .g. full pension of 10,000 per year (12 cash for 1 pa pension) Maximum tax-free for life and a pension of 6,400 paid per year for life cash of 42,800 You dont have to take the maximum tax- Flexible retirement Step down Continue working in the NHS

1995 Sectio n 2008 Sectio n 2015 Schem e Step down to a different role Protected pay for 1995/2008 pensions Wind down Draw down Remain in current post Continue working in the NHS Work fewer hours

Partially draw down benefits No impact on past pensions Can build up more pension Retire & return Leave employment and claim pension Take a short break 1995 members cant build up more pension

Ill-health retirement (with at least 2 years service) Permanently ill and unable to do current job Permanently ill and unable to do any job Terminally ill Tier 1

benefits Pension paid without reduction for early payment Tier 2 benefits Pension (calculated with extra service) paid without reduction for early payment Benefits paid in a single lump sum 8. Saving enough to stop work Your total retirement income might be made up of Other pensions State pension Other saving s

NHS pension How much is enough money to stop work? Lots of research 50% to 75% of pay? % income replacement = pension pay To pay for the basics the lower your pay, the higher the % needed But what is right for you? Think it through with your partner the higher your pay, the lower the % needed How much is enough Rough rule of thumb Target income = 15,000 + (Pay over 15,000) 3

Total retirement income (per year) Pay 25,000 pa Target 18,300 pa Pay 50,000 Target 26,700 pa Pay 75,000 Target 35,000 pa Total income before retirement (per year) But if you want to keep the same income Pay of 25,000 Over a year Total retirement Pay in work income target 83% Gross amount 25,000 20,700 Pension (7.1%) (1,775)

Nil Income tax (2,345) (1,840) National Insurance (2,020) Nil 100 % What you actually Remember your total retirement 18,860 income could be18,860 made up from receive the State Pension, NHS Pension and other saving sources. But if you want to keep the same income Pay of 40,000 Over a year Total

retirement Pay in work income target 79% Gross amount 40,000 31,505 Pension (9.3%) (3,720) Nil Income tax (4,956) (4,001) National Insurance (3,820) Nil 100 %

What you actually Remember your total retirement 27,504 income could be27,504 made up from receive the State Pension, NHS Pension and other saving sources. How much is enough? a detailed approach Spending might go down Spending might go up No mortgage More holidays Children finally left home More leisure time Dont have to save for retirement Heating bills No National

Insurance to pay Long term care Think it through with your partner State Pension When you might get it? Will the State Pension be worth waiting for? Average amount paid over lifetime Weekly Amount Average years in Date Age(2017 prices) payment 1909 70 20 1948 W: 60 M: 65 45 2020 66 160

2040 68+ 160+ But will be lower if youve been in the NHS Pension Scheme for several 8,000 9 years 8 years 36,000 19.5 years 13 years 23 years 21 years 24 years 22 years 60 70 80

182,0 00 182,0 00+ 90 Request a State Pension Statement Go to: www.gov.uk/check-statepension You will need one of these: What your State Pension forecast might look like The earliest you can get your State Pension is 1 December 2039 when youll be 67, Your estimate is 159.55 a week Your estimate is based on the current law. The amount shown is not a guarantee and is based on Breakdown Amount based on your latest National Insurance record (5 April 2016) 85.32 a week

which is 369.72 a month, or 4,436.64you a year Amount may get if you continue to contribute 159.55 a week which is 691 a month, or 8,297 a year Are you on track? Stack up your savings Other pensions Ask for retirement quotes State pension At what age would you like to stop work Other saving s NHS pension Consider your total

income needs for retirement Look closely at your budge t and spendi ng 9. Ways to increase your benefits Buying more pension Additional pension (AP) Buy extra guaranteed income In blocks of 250 per year Cost depends on Your age How many blocks you buy If you buy a survivors pension Scheme pension AP You can pay by

A single lump sum Paid every year for life Monthly (via payroll) Eligible for income tax relief Making extra pension savings Additional voluntary contributions (AVCs) Held separately from your main scheme benefits In a pension savings account Scheme pension AVCs Size of your savings depends on How much you pay in Investment returns Management charges You can pay by Single lump sums

Choose how you receive it Monthly (via payroll) Earlier retirement age for 2015 Scheme only Early retirement reduction buy out (ERRBO) Reduce your Normal Pension Age (NPA) by up to 3 years Scheme pension Scheme pension With ERRBO Cost depends on Your age Number of years reduction You can pay by Monthly (via payroll) An example

Paid every year for life from NPA Paid every year for life from earlier age NPA in new scheme is 68 Take Same out a 3pension year paid from ERRBO 65 10. Pensions tax The Annual Allowance (AA) Limit on tax-relieved pension savings in one year for all pension savers, not just NHS Headline AA is currently 40,000 pa If you breach the AA, you may be subject to a tax charge Value of benefits earned over the

year Pension Input Amount Excess Annual Allowan ce A tax charge will fall due on this excess accrual unless there is sufficient carryforward Testing against the AA DB pension earned over the year (in real terms) NHS Pension Scheme Defined Benefit AVCs Defined Contribution Pension

built up at end of year Factor of 16 Pension built up at start of year (uplifted for inflation) Value of one years DB pension saving DC pension earned over the year Gross contributions paid Value of one years DC pension saving Breaching the Annual Allowance Value of one years pension saving DB + DC 40,000*

plus carry forward from last 3 years (*ignores tapering) Excess pension savings Keeping track of the AA The Scheme will send you a statement if you exceed the AA Your statement will show the value of your pension savings for the latest tax year and the previous 3 years, enabling you to work out your unused AA to carry forward. The Scheme will ONLY inform you about the value of your NHS benefits. You need to also consider benefits you might be building up outside the Scheme. Annual Allowance How to pay Excess pension savings AA tax charge = Excess pension savings relevant rate(s) of income tax

AA tax charge can be paid by the (1)scheme member Taxable income (2)pension scheme Self-assessment tax return Scheme Pays Paid out of post-tax income Tax charge > 2,000 Benefits unchanged Benefits reduced The AA can be less than 40,000 Test 1 Threshold Is your taxable income income* more than 110,000? No

Annual Allowance is 40,000 (*not just employment earnings, exclude pension contributions) Yes Test 2 Adjusted Adding income on the value of your pension savings, does this sum to more than 150,000? No Yes Annual Allowance is lower than 40,000 The tapered AA Each 2 of adjusted income above 150,000,

reduces the AA by 1 With a minimum AA of 10,000 Adjusted income Annual Allowance Less than 150,000 40,000 160,000 35,000 170,000 30,000 180,000 25,000 190,000 20,000

200,000 15,000 More than 210,000 10,000 The Lifetime Allowance (LTA) Limit on tax-relieved pension savings over a lifetime for all pension savers not just NHS LTA is currently 1,030,000 (2018/19) If you breach the LTA, you may be subject to a tax charge Excess Total value of benefits across all schemes Lifetime Allowan ce A tax charge will fall due on these excess

benefits Testing against the LTA *only when benefits are taken* NHS Pension Scheme Defined Benefit AVCs Actual pension taken at retirement Cash lump sum (at face value) Face value of cash taken Or, value of savings when annuity bought Or, value of savings allocated to drawdown Factor of 20 Value of

DB Value of DC Breaching the Lifetime Allowance Value of benefits taken LTA Chargeable amount Paying a Lifetime Allowance charge Chargeable amount LTA LTA tax charge, paid by the scheme = Chargeable amount rate of either 55% or 25% (1) Excess taken as lump sum (2) Excess taken as pension

LTA tax charge = 55% (adjusted) chargeable amount (Remainder: 45% taken as lump sum) LTA tax charge = 25% chargeable amount (Remainder: 75% taken as pension) For higher rate taxpayers the options are effectively equivalent Ways to mitigate the LTA tax charge LTA protections For a protected LTA higher than 1m Giving up pension for cash Can reduce the value of benefits Early retirement Will reduce benefits at retirement Allocation Only member benefits tested

Scheme Pays for AA Reduces the value of benefits Disclaimers and warnings The content of this presentation is designed to assist NHS employers in providing their employees with helpful information regarding pension saving. None of the material provided is intended as financial advice or recommendation and NHS Employers accept no liability arising from any use of the presentation. If employees require specific advice or help regarding their financial planning, they should contact an Appropriately Qualified Financial Adviser. This presentation has been created using PowerPoint 2016. Spacing and formatting may change if a different version is used. We recommend that users check the presentation before delivery to spot and correct any format changes. NHS Employers cannot take responsibility for any amendments, edits and additions made from this point forward by users. We have taken every care in the preparation of these materials, but it is not binding. If any error or omission should subsequently be discovered, the scheme regulations take precedence. We understand the information, illustrations and figures quoted to be accurate at the time of writing (26 January

2018). However, over time these will become out of date for example as tax bands or contribution rates change over time, new legislation or tax treatments are introduced or altered, and new financial products and systems are introduced. We take no responsibility in ensuring the materials are kept up to date. Any figures set out in this presentation are intended as illustrations only. The benefits provided by the NHS Pension Scheme are governed by Regulations. More details of the benefits provided by the Scheme can be found on the Scheme website. Some of the information provided is opinion based, for example setting out rules of thumb or the value of the State Pension. The materials covering these sections are therefore not intended to be statements of fact. Very different viewpoints or opinions could reasonably be taken, and each individual will be different. Specifically these opinions are not intended to direct individuals to take a particular course of action, but are provided as generic ideas to be considered.

Recently Viewed Presentations

  • 4th Grade Social Studies - J. Glenn Edwards Elementary

    4th Grade Social Studies - J. Glenn Edwards Elementary

    4th Grade Social Studies . 1st Semester Review. ... Chapter 5 Settling North Carolina . Lesson 1: The Lost Colony. Expedition: a journey taken by a group of people. Colony: is an area of land ruled by another country ....
  • www.wlwv.k12.or.us

    www.wlwv.k12.or.us

    Label the diagram (hair) A. B. C. Medulla . Cuticle. Cortex . Question #20. What part of the nail is responsible for nail growth? ... Epidermis, Dermis, Hypodermis . Question #4. What type of tissue are each layer of the...
  • Rise of the Ottoman Empire, C. 1299-1600 I.

    Rise of the Ottoman Empire, C. 1299-1600 I.

    Times New Roman Times Symbol Default Design Rise of the Ottoman Empire, C. 1299-1600 I. Introduction II. Origins of the Ottoman Empire III. Ottoman Dominance (1453- 1699) III. Ottoman Dominance (1453- 1699) IV. Sources of Ottoman Strength IV. Sources of...
  • Project Communication Management - ICT 4 SIDS

    Project Communication Management - ICT 4 SIDS

    The Pilot Project has clearly demonstrated the need for ICT education in Tanzania -- the applicants for the classes for 30 students exceeded 100. The initial objective of the HU-Tanzania Stem (HTS) Center is to focus on ICT Education first...
  • Short Story Telling a fictional story . .

    Short Story Telling a fictional story . .

    Short Story B a s i c s i n a B o x Short Story at a Glance RUBRIC Standards for Writing A successful short story should use the elements of character, setting, and plot to create a convincing...
  • What's new in Urology?

    What's new in Urology?

    What's new in Urology? GP UPDATE. 16th October, 2014. Miss Janelle Brennan
  • 2.875 Mechanical Assembly and Its Role in Product

    2.875 Mechanical Assembly and Its Role in Product

    Peg and hole, and rim and slot. Two pegs and two holes. Peg and hole with the hole in the gear for intermediate and driven gears. In the case of the output gear, the peg as part of the gear...
  • Kinetic Heat - Belmont Public Schools

    Kinetic Heat - Belmont Public Schools

    A: Unless the socks are warmer than Alexi, they don't give him any heat. However, socks are good insulators; they trap the heat in Alexi's feet and don't let it escape. Q: If a metal desk leg and a wooden...