This article should be useful to those interested in the NHS pension scheme for doctors and dentists in England & Wales as it contains details of the NHS pension scheme proposed final agreement. It is proposed that these changes will take place from 2015.

Main changes to the NHS pension scheme for doctors and dentists

  • The whole scheme will now move to a career average basis (CARE).  This is not a change for medical practitioners.
  • The accrual rate will move to 1/54 with no limit to pensionable service. Currently the accrual rate is different depending on the section you are in, and service is limited to 45 years.
  • The normal pension age will move to being aligned to State Pension age. This means that members of the new scheme will retire later than the 55/60 of the 1995 section, and 65 of the 2008 section.  The State pension age is gradually moving to age 68. This will apply to all service after 2015.
  • Pensions will increase in payment by CPI plus 1.5% per year.

Transitional protection

  • All accrued rights in the NHS pension scheme for doctors & dentists will be protected and will be based on the final salaries of members at retirement for service prior to 2015.
  • All active members of the 1995 section with less than 10 years to normal retirement age (as at 1/4/12) or who are past retirement age will continue to be members of the 1995 section and have their future benefits protected. There is limited protection for members within a further 3 years an 9 months of retirement at the above date on a tapering basis.
  • All active members in the 2008 section who have 10 years or less to their current normal pension age of 65 (as at 1/4/12), or are over 65 will be given protection by their being allowed to remain in their current arrangements until they retire. A tapered arrangement (on the same basis as above) will apply those within a further 3 years and 5 months of their current normal pension age as of 1 April 2012. However, whilst these members are covered by protection, they will be given a one-off option prior to 2015 to opt-out of protection and transfer to the new scheme in 2015. This opt-out is being made available because modelling of the impact of the new scheme on these protected members has suggested that the majority could be better off if they transfer to the new arrangements.

Proposed NHS pension scheme for doctors & dentists contribution rates

Earnings                                  12/13          13/14          14/15 £48,983 to £69,931           8.9%             11.3%          12.5% £69,932 to £110,273        9.9%             12.3%          13.5% Over £110,273                     10.9%           13.3%          14.5%

Calculating how the proposed changes will affect you

The BMA has published an online calculator designed to show you how the proposed NHS pension scheme changes will affect you.  Click here for the calculator.

How financial planning can help you

The proposed changes will prompt you to think about how your personal situation will change going forward.  Essentially you are potentially being asked to pay more to retire later on less money.  Financial planning can help you to work out how these changes will impact on your future prosperity.  We can help you to evaluate different courses of action and decide which is best for you, ultimately aiming to secure your future.

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