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Pensions In Practice (PIPS) “Your monthly review of NHS Pensions from Fairway Training”
Issue: 11 Date: August 2016
Fairway Training Ltd Specialists in NHS Pensions & Payroll
Administration and Training
www.fairwaytraining.com
As Managing Director of Fairway Training I don’t
mind revealing to you that on 10th
June 1980 an
important decision was made on my behalf. I
was informed that as an NHS employee working
as a wages clerk at the now defunct Bromsgrove
and Redditch Health Authority, I had become a
member of the NHS Pension Scheme. This was
by virtue of the fact that I had reached 18 years
of age and I was a full time employee. In those
days there was no option to ‘opt out’ and 18
was the minimum joining age (it’s 16 now).
As an 18 year old, thinking about pensions and
retirement was something that was not
uppermost in my mind! I was probably not
thinking that this might be a great idea and what
my pension would be worth when I retired!
However, I reluctantly had to accept the
decision and it didn’t take me long to realise
that this was in fact a good turn of events in my
fledgling NHS career. Although this came to an
end 22 years later, I look back at that decision
and recognise that it will have a significant
impact on my future retirement.
Thirty-six years later the world of pensions has
changed dramatically and unless you are a fully
protected member of the 1995 Section, you will
find the NHS Pension world is very different
from those distant days of June 1980. The
original Scheme has been renamed the 1995
Section; the 2008 Section and 2015 Scheme
have appeared with differing membership
rules, benefit calculations and retirement
ages.
I think it’s fair to say that as the NHS Pension
Scheme has evolved, not only has it become
more complicated, but the demand for
information including estimates of future
pension income has increased.
One of the most common questions asked by
employees is ‘How much will my pension be
worth?’ and this increases as retirement
draws nearer. To assist in answering this
question NHS Pensions have a number of very
helpful tools and literature available but
disappointingly have recently decided to
introduce charges for providing estimates
which assist employees in retirement
planning. Although branded as encouraging
employees to self serve by visiting the NHS
Pensions and Total Reward Statements
websites, in our opinion it’s a case of trying to
stem the number of enquiries by introducing
charges for this service. Maybe the number of
enquiries received by NHS Pensions
demonstrates the appetite employees have
to understand their pension!
From our experience an employee will often
ask their employer to produce this type of
information. You need to be prepared for this
and we have produced some guidance on the
next page to assist. It is still important that
you understand the roles and responsibilities
that are placed upon you by NHS Pensions as
part of the Employer’s Charter. If
you are not familiar with this it was
covered extensively in PIPS 8.
The government recently introduced
a 5p charge for plastic bags to
combat environmental issues and on
the whole most people would agree
that this was a sensible idea.
However, it does not seem logical or
fair to charge members for
information about their own public
sector pension. However it is now
unlikely that the situation will
change so instead let’s look
positively at the options currently
available for obtaining annual
benefit statements and estimates.
Andrew Shirley - Managing Director
Member’s Charter
Estimates & ABS
Newsletter Reviews
(February -July16)
Fairway News
Fairway Training Ltd Specialists in NHS Pensions & Payroll
Administration and Training
Issue: 11 Date: August 2016
1. Employee Self Service – using Annual Benefit Statement
(ABS)
The first port of call for an employee should be the Total
Reward Statement website
www.totalrewardstatements.nhs.uk. This is the method being
promoted widely by NHS Pensions and will allow the
employee to access their ABS. It is important to note that the
ABS will only provide the current value of their pension. We
covered the ABS production extensively in PIPs 2 if you
require more information about this.
There are now tutorial videos which you can view by clicking
here.
2. Employee Self Service - Using website calculators
NHS Pensions have options available on their website in the
Members Hub section (Pensions Calculators). The Standard
Pension Calculator is only for members who only have 1995
membership and is a very basic tool. This should not be relied
upon to produce accurate information as it excludes many
factors such as part time membership. Fairway Training would
not recommend using this as a tool for retirement planning
and should be used with great caution!
3. Employer assisted
If as an employer you wish to assist employees in providing
such information, you can of course use Pensions Online
(POL). POL will enable Annual Benefit Statements and
Estimates to be produced. However these are currently only
available as follows:
For fully protected 1995 and 2008 members
o Annual Benefit Statement
o Estimate to Normal Retirement Age
o Actuarially Reduced Early Retirement estimate
o Ill Health Retirement estimate
For partially protected 1995 and 2008 members
o Annual Benefit Statement
o Estimate to the date Partial Protection ends
For 2015 members
o No Annual Benefit Statement available
o No Estimates available
For 1995 and 2008 members who have no protection or
protection has expired
o No Annual Benefit Statement available
o No Estimates available
N.B For fully protected 1995/2008 members close to retirement
age it is good practice to produce an estimate from POL to help
them decide which option to choose with regards to the Lump
Sum. Producing this on POL is of course free but if they are
referred to NHS Pensions for this information it could cost them
£75.00!
4. via NHS Pensions
Finally, and probably as a last resort because of the new charges
introduced, an approach can be made to NHS Pensions using form
Estimates-SIA Estimate Request Form(Post 13.07.2016)-20160728-
V12.
The charges to be incurred are clearly displayed on the application
form but have been reproduced here as a quick reference. When
accessing the form you will also note that payment has to be made
in advance either by cheque or bank transfer.
Fairway Training Ltd Specialists in NHS Pensions & Payroll
Administration and Training
Issue: 11 Date: August 2016
There are a number of items which affect GP Practices and we
have commented further below. The numbering reflects the
number of the article within the original newsletter.
February 2016 Newsletter
1. End of Contracting out National Insurance
Just a quick reminder that ‘contracted out’ National Insurance
ended on 5th
April 2016. NI letters D, E and I should not be in
use anymore. Your payroll software should have been
amended to reflect this change.
3. Digital guides and forms
With a certain degree of inevitability NHS Pensions have
confirmed that future guides will only be available digitally as
the Government is moving away from printing hard copies.
Only forms AW8, AW33E and RF12 will be available from the
stationery order line. All other forms and guides are only
available as digital downloads.
N.B Fairway Training will soon be launching our new website
which will include the ‘Fairway Vault’.
This will be a more convenient way of finding the forms,
guides and factsheets issued by NHS Pensions to assist you in
administering the NHS Pension Scheme.
8. Introduction of Stakeholder Engagement Team
A number of new roles at NHS Pensions were unveiled as part
of the Stakeholder Engagement Team. Each of the team has
specific responsibilities and can be contacted on
nhsbsa.stakeholderengagement@nhs.net. Please note the
following contact names:
Verity Taylor – Responsible for Direction and IP employers
Joanne Coultas – Responsible for GP Practices
15. Member newsletter
A reminder that members can subscribe to the members
newsletter. This can be done by emailing
nhsbsa.pensionsmembernewsletter@nhs.net. It can also be
downloaded by clicking here.
Fairway Training consider the newsletters to be an excellent
way of keeping staff updated with the latest news about the
NHS Pension Scheme and we would recommend that you
encourage your staff to sign up to the mailing list.
March 2016 Newsletter
8. Contacting NHS Pensions by email
This is a brief summary of the email addresses to use for NHS
Pensions:
Emails sent to other addresses not in use will be deleted and
you should receive an auto response to confirm the action
taken by NHS Pensions.
April 2016 Newsletter
2. Use of Exit code 02 on SD55 Termination
Employers are reminded that exit code 02 should only be used
on form SD55T when an employee has been dismissed for
fraud resulting in a loss of public funds and the employer
Fairway Training Ltd Specialists in NHS Pensions & Payroll
Administration and Training
Issue: 11 Date: August 2016
is recommending that the member’s pension benefits are
withheld.
This should be a rare event (hopefully) and to ensure the exit
code is used correctly NHS Pensions will issue employers with
a form if an SD55T contains exit code 02.
7. Additional Pension lump sum purchases
NHS Pensions have urged employers to email NHS Pensions
within one month of receiving an Additional Pension lump
sum payment from the member. The email address to use is
nhsbsa.apconfirmpayment@nhs.net.
If no confirmation is received within one month, the
member’s application is cancelled and a new application has
to be made.
N.B Please ensure that the Additional Pension lump sum
payment is paid to NHS Pensions as soon as possible after it
has been received from the employee. This can be done by
simply increasing the monthly GP1 payment.
May 2016 Newsletter
1. Membership enquiries
For a long time we have been advocating that it is important
that members check their membership records to ensure that
all pensionable employments and part time hours are
recorded correctly.
NHS Pensions are concerned that because employers have
been reorganised many times over a period of time, it is often
quite difficult to access information, particularly as many
organisations now only keep records for seven years. With
this in mind a new fact sheet and enquiry forms have been
introduced as follows:
Membership Factsheet which can be downloaded here
SM27A – (Member) – To request a membership statement
SM27B – (Member) – To query missing or incorrect
membership directly with an employer
SM27C – (Member) – To query historical missing or incorrect
membership with NHS Pensions
SM27D – (Employer) – An employer enquiry reply form
All forms can be found on the NHS Pensions website which
can be found by clicking here.
3. Data Update
NHS Pensions reported some statistics for the 2015/2016
update. An impressive 1,332,259 year end updates were
processed with a 90% success rate. Employers are
encouraged to check via Pensions Online to see if any errors
are reported in Error Handling and to clear any issues that
may have arisen.
7. Contact details
NHS Pensions urged Employers to ensure that their details are
correct on Pensions Online (POL) so that newsletters and
communications are delivered to the correct person. You can
change contact details via POL or by emailing
nhsbsa.contactdetails@nhs.net. Please ensure that you quote
your GP/EA Code in any communications.
June 2016 Newsletter
2. Establishing the rate of pensionable pay/earnings for the
initial adult dependant’s pension
NHS Pensions issued guidance about rates to pay for the
initial pension in the event of a member’s death whilst in
service. For clarification, an initial pension is paid when a
member dies in service to:
A legal spouse or
A registered civil partner or
A nominated non legal partner
If this is the case an initial pension is payable for six months
starting from the day after the date of death. The monthly
pay is based on the annual rate of member’s pensionable pay
at the time of death for the 1995 Section, 2008 Section and
2015 Scheme members.
We are aware that the calculation for 2015 Scheme members
may vary slightly from the advice given by NHS Pensions
above and we are seeking clarification on this.
4. Transfers in – Disclosure of information
NHS Pensions have received a significant increase in the
number of late transfer applications. Employers are reminded
that they must issue members with the relevant information
within the prescribed time limits to allow members to make
important decisions about their NHS Pension and any
previous pensions that they may be considering transferring
into the Scheme. It’s important to note that strict time limits
apply.
Fairway Training Ltd Specialists in NHS Pensions & Payroll
Administration and Training
Issue: 11 Date: August 2016
Fairway Training would encourage employers to issue the
Scheme Guide to all new members of staff at the earliest
opportunity even if that is before the employee has started. It
is acceptable to email the employee with this information but
you must ensure the guide is an attachment rather than a link
to the NHS Pensions website.
5. Pensions Online (New functionality)
As mentioned in our lead article, NHS Pensions currently have
no provision via Pensions Online for an age estimate for a
2015 Scheme member. They have however confirmed that
they hope to at least be able to provide an estimate of the
pension accrued at some point in the near future.
In essence this should be quite simple in our opinion as the
calculation is just 1/54th
of the pensionable pay reported.
That figure becomes the pension payable at State Pension
Age. NHS Pensions have commented that they are unable to
provide estimates beyond 31st
March 2016 because ‘it isn’t
possible to predict future increases’. The irony here is that the
1995 estimating model assumes that the member will earn
the same salary and work the same hours until normal
retirement age.
Using the same model that is currently in use, estimations for
the 2015 Scheme are therefore reasonably similar as
illustrated below.
Example
An employee joins the 2015 NHS Pension Scheme on
1st
April 2015 and retires at State Pension Age on 31st
March 2035 aged 68.
Between 1st
April 2015 and 31st
March 2016 he earns
pensionable pay figure of £17,550.00.
This is reported to NHS Pensions by the employer as
part of the 2015/2016 year end update process.
Behind the scenes NHS Pension will allocate 1/54th
of
£17,550.00 towards his pension. The value would
therefore be £325.00.
If the employee wants to estimate his pension when
he retires, taking into account no future increases,
no changes in work pattern and no inflation, he
could simply multiply £325.00 by 20. This gives an
annual pension of £6,500.00.
This is exactly what the current estimating model
used by Pensions Online calculates for 1995
members and shows his annual pension at today’s
value!
So with a few refinements, hopefully NHS Pensions should be
able to provide a tool to assist with estimating 2015 Scheme
benefits.
July 2016 Newsletter
1. Rollout plan for Annual Benefit Statements (ABS)
NHS Pensions anticipate that it will be late August when the
first ‘refresh’ of the ABS system takes place and the latest
statements will be available. As mentioned earlier these will
of course only provide a statement of current pension value.
3. Revised retirement benefit details form (AW171)
A revised approach has been introduced by NHS Pensions to
deal with amendments to previously submitted retirement
information on the AW8 form. The updated form can be
completed electronically (download from
http://www.nhsbsa.nhs.uk/Documents/Pensions/AW171_(V4
)_-_07.2016.pdf)
and emailed to NHS Pensions (nhsbsa.polia@nhs.net). This is
the preferred option for NHS Pensions. If the form is being
used in the case of bereavement it must be emailed to
nhsbsa.bereavement@nhs.net
NHS Pensions have conceded that currently in most cases
retirement applications are processed after the retirement
date. This is different from previous commitments but the
Employer’s Charter has been amended (section 4 – The role
of NHS Pensions) and states “NHS Pensions will: Accurately
calculate and pay NHS Pension Scheme entitlements within 30
days of retirement.” It would be a good idea to make
employees aware of this when processing retirement
benefits.
NHS Pensions will contact the employer near the retirement
date to check if the information submitted via form AW8 is
still correct. If an amendment is needed you will be asked to
submit form AW171 urgently.
There is some logic to this as it will negate the need to issue
an initial award and then a revised award which can be
somewhat confusing for the member.
6. Destruction of paper files
All items including paper copies of any form received at NHS
Pensions are now scanned and stored electronically.
It is recommended that employers take copies of documents
sent to NHS Pensions and retain these in accordance with
Fairway Training Ltd Specialists in NHS Pensions & Payroll
Administration and Training
Issue: 11 Date: August 2016
Editorial Team:
Andrew Shirley
Daniel Bott
Stephen Blake
their own local policies.
9. Retirement – Which forms should be used?
A small grey area in previous years has been the debate
about whether form AW8 or AW8(P) should be used. NHS
Pensions have changed their procedures as shown below:
If a member is in employment (even if they are not
actively contributing to the Scheme), you should
submit a ‘retirement benefits claim form (AW8)’. You
should make it clear what date the member would like
to claim their benefits from.
If a member is not in employment, they should submit
a ‘deferred benefits claim form (AW8P)’ which will be
available on our new website. This includes members
who are claiming their benefits within 12 months of
leaving. Employers should ensure membership and pay
details are updated for all leavers within one month of
the leaving date. We will use the pay details supplied
to calculate the retirement benefits. This means that
employers will no longer be required to complete an
AW8 for an employee who claims their benefits within
12 months of leaving the Practice.
Pension Administration Service
We continue to be victims of our own success and we have
seen an increase in the demand for our Pension
Administration service - so much so that we are not taking
on any new clients at this stage and will let you know via
PIPs when this situation changes. It is most important that
we continue to deliver a high quality service to our current
clients and we do not wish to compromise this. I hope you
understand our stance in this respect.
Payroll Service
In the December 2015 edition of PIPs we informed you that
we had closed our waiting list for new clients which was full
for quite some time into the future. We are continuing to
service the waiting list and we are working our way through
to bring on new clients who had already booked in for the
full Payroll Service. For the same reasons as described
above, when this situation changes we will inform you
accordingly.
We welcome your feed back and you can review us at:
http://practiceindex.co.uk/gp/fairway-training-ltd
Away Day
We will be holding our annual
staff ‘Away Day’ on Friday 16th
September 2016. This is an
important day for Fairway
Training staff as we take time
out of the usual routine to have
some training, team building
and examine future strategy.
Please note that the office will be closed for the day
including the Helpline. You can still email or fax queries as
usual but they will not be dealt with until Monday 19th
September. Thank you in advance for your understanding.
Training Courses
We will soon be holding another series of one day courses in
various parts of the country. These will be publicised very
shortly and if you are new to NHS Pensions or need a
refresher, this course will prove very useful. Look out for
further details being emailed to you shortly.
Fairway Contact Details
Fairway Training Ltd
Suite 1E, South Wing
Prospect House
Redditch,
Worc’s B97 6EW
Payroll Team: 01527 912188
Pension Team: 01527 588097
Payroll Fax: 01527 62400
Pension Fax: 01527 588098
Helpline: 01527 588099
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