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