Launch of new pension scheme in England and Wales

Updated: Friday 14 March 2008

Following four years of successful consultation and negotiation by the RCN and other NHS partners, new NHS pension arrangements for England and Wales were launched on 21 September 2007.

The RCN is delighted with the new arrangements, which offer the key benefits that RCN members said were important – retention of a final salary scheme, protection of normal pension age for current scheme members (and 55 for those with mental health officer (MHO) and special class status).

The new arrangements will come into effect on 1 April 2008.

What has the RCN been doing on pensions?

The final agreement on the NHS Pension Review represents the end of four years of negotiation by the RCN and other NHS Trade Unions with the Government and NHS Employers.

During this period the RCN held the position of vice chair of the NHS staff side. We also consulted widely with members, published information and conducted research with you to identify your key priorities.

At the start of the review, the Government made it clear they preferred to close the final salary scheme and introduce a career average scheme for everybody. They also said the pension age must increase to 65 for everybody without exception.

However, the RCN and other trade unions together put forward powerful arguments, including the RCN’s No to 65 campaign, which have persuaded the government to reconsider and reach an agreement that protects the pension age of current scheme members. In subsequent negotiations the unions also secured agreement for a final salary pension scheme for new NHS staff – a major achievement in the current economic climate.

What are the different schemes?

When the changes come into effect, there will be two new schemes:

  • The NHS Pension Scheme
    This is the current NHS pension scheme with updated rules and benefits. It will continue to be a final salary scheme with a normal pension age of 60 (or 55 for special classes). This scheme is for current scheme members and for those who choose to join before 1 April 2008.
  • The New NHS Pension Scheme
    This is a new final salary scheme for anyone who joins on or after 1 April 2008. It will have a normal pension age of 65, a higher accrual rate and a different set of rules and benefits.

A new contribution framework will also be introduced to both schemes that links contribution rates more closely to pension benefits received.

New arrangements from 1 April 2008

New Arrangements for the NHS pension are due to come into effect on 1 April 2008.

Members of the Royal College of Nursing are advised to note the following information.

1. New contribution rates will apply to everyone as follows:

Pensionable pay (based on 2007/08 earnings) and contribution percentages           
£19,682: contribution rate 5%
£19,683 - £65,002: contribution rate 6.5%
£65,003 - £102,499: contribution rate 7.5%
£102,500+: contribution rate 8.5%

2. Staff will be allocated to a contribution tier for the whole of the year on the basis of their whole year earnings in 2007/8.

3. Forms to nominate unmarried partners or two or more individuals to receive death in service lump sum are now available on the NHS Pensions Agency website.

4. A number of 'calculators' are available for you to use on the NHS Pensions Agency website.

The contributions calculator shows the amount that will be deducted in pension contributions from members' pay when the scheme changes come into effect on 1 April 2008.

The standard pension calculator shows what members can expect to receive in pension and lump sum if they retire before 1 April 2008. It also shows what those retiring on or after this date (apart from those retiring from the New NHS Pension Scheme) will receive if they decide NOT to take up the new option to increase their lump sum. This is the same calculator that has been up on the pensions website for the last few years.

The pension commutation calculator shows, for members retiring on or after 1 April 2008, what they will receive if they choose to give up (or ‘commute’) some of their pension in return for a larger lump sum on retirement.

By the end of March 2008 a fourth calculator will be available - the additional pension calculator. This can be used by members wishing to pay higher contributions in order to increase their pension when they retire. It shows how much different levels of increase will cost.

5. A separate calculator will be available in due course for people retiring from the New NHS
Pension Scheme, since different terms apply to the lump sum arrangements for the New Scheme.

6. Special Notice for members retiring BEFORE 2 April 2008. The pension changes mean that different rules and benefits will apply to people who retire on or before 1 April 2008. It is important for you to understand the differences before you decide which date to retire. Please  download the Retiring Soon Factsheet (PDF, 59.1Kb) from the NHS Pension Agency website.