CALCULATING RETIREMENT BENEFITS

Officers / Employees

Retirement income is calculated at a rate of 1/80th of final year's salary for each year of scheme membership for pre 1st April 2008 members. For post 1st April 2008 members pension lengths are based upon 1/60th of your final years salary. Part years of service also count towards the pension.

In most cases the tax-free cash lump sum will be equal to three times the yearly pension. For example, assuming an individual had completed the maximum 40 years service at the normal retirement age of 60 and retiring with a superannuable salary of £70,000, the following benefits arise.

However, married men who joined the scheme before 25 March 1972 may get a smaller lump sum. The reason for this is that membership before that date only counts as a third of the value of post 25 March 1972 membership with respect to the lump sum calculation.

Practitioners

As a Practitioner, you are not directly employed by the NHS and the calculation basis for your pension entitlement is entirely different. The calculation of your retirement benefits is based upon your revalued lifetime pensionable income to normal retirement date multiplied by a factor of 1.4% for pre 1st April 2008 members. For post 1st April 2008 members, a factor of 1.87% is applied.

Example: Pre 1st April 2008 members:

Dental Practitioners should remember, however, that only 43.9% of their income from NHS work is allowable in the calculation of their benefits.

In the case where you worked as both an Officer and a Practitioner during your career, a combination of both calculation methods will be used to establish your final retirement benefits.

Calculating the retirement benefits of an individual assessed under the 1.4% / 1.87% regime is extremely complex. Contact us for further advice.

Retirement Issues for Doctors and Dental Practitioners

If you are a Doctor or Dentist it is quite likely that you did not complete your training until you were at least 24. Given that the normal age for retiring from the NHS is 60, you will not be able to complete the 40 years service by then and thus secure maximum retirement benefits.

However, there is a range of options available to you with regards to maximising your retirement benefits. These include:

• Additional Income Option
• Money Purchase AVC option

We have the specialist NHS Pension Scheme experience to ensure that you make the most of your retirement. Contact us for Specialist Independent Financial Planning Advice.

Next: Life Cover Benefits