NHS Pensions - Annual Allowance – Scheme Pays recovery factors We recover the cost of paying your Annual Allowance charge by permanently reducing your NHS benefits when they are paid to you. At your retirement the total negative DC balance owing, including all relevant interest will be converted into an amount to be permanently deducted from your NHS benefits. The actual reduction is calculated using factors provided by the scheme actuary. Table SP1 - Retirement – normal health (age, early and late) Age last birthday 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 1995 Section 26.28 25.96 25.63 25.30 24.95 24.60 24.24 23.87 23.49 23.11 22.71 22.31 21.89 21.47 21.04 20.60 20.15 19.69 19.22 18.73 18.25 17.75 17.24 16.73 16.22 15.71 2008 Section 2015 Scheme 21.60 21.24 20.87 20.49 20.11 19.71 19.31 18.89 18.47 18.04 17.60 17.15 16.69 16.22 15.73 15.25 14.75 14.24 13.73 13.22 12.71 21.60 21.24 20.87 20.49 20.11 19.71 19.31 18.89 18.47 18.04 17.60 17.15 16.69 16.22 15.73 15.25 14.75 14.24 13.73 13.22 12.71 Annual Allowance - Scheme Pays recovery factors (09.2016) V1 1 Table SP2 - Retirement - ill health Age last birthday 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 1995 Section 30.05 29.89 29.72 29.55 29.38 29.21 29.03 28.85 28.68 28.50 28.32 28.15 27.97 27.79 27.61 27.43 27.24 27.06 26.88 26.69 26.49 26.29 26.08 25.86 25.62 25.38 25.12 24.85 24.56 24.27 23.97 23.66 23.35 23.02 22.70 22.36 22.02 21.66 21.30 20.93 2008 Section 27.05 26.89 26.72 26.55 26.38 26.21 26.03 25.85 25.68 25.50 25.32 25.15 24.97 24.79 24.61 24.43 24.24 24.06 23.88 23.69 23.49 23.29 23.08 22.86 22.62 22.38 22.12 21.85 21.56 21.27 20.97 20.66 20.35 20.02 19.70 19.36 19.02 18.66 18.30 17.93 17.56 17.17 16.78 16.38 15.98 2015 Scheme 27.05 26.89 26.72 26.55 26.38 26.21 26.03 25.85 25.68 25.50 25.32 25.15 24.97 24.79 24.61 24.43 24.24 24.06 23.88 23.69 23.49 23.29 23.08 22.86 22.62 22.38 22.12 21.85 21.56 21.27 20.97 20.66 20.35 20.02 19.70 19.36 19.02 18.66 18.30 17.93 17.56 17.17 16.78 16.38 15.98 15.56 15.13 14.69 Annual Allowance - Scheme Pays recovery factors (09.2016) V1 2 Scheme Pays recovery examples Example 1: 1995 Section Helen elected for Scheme Pays to pay her Annual Allowance charge of £26,000 and is retiring on her 60th birthday. With interest her total negative DC balance at age 60 is £35,200.50. This means her 1995 Section age pension will be reduced by £1,549.98 (£35,200.50 / 22.71) and her lump sum by £4,649.94 (£1,549.98 x 3). Example 2: 2008 Section Mark elected for Scheme Pays to pay his Annual Allowance charge of £18,000 and is retiring because of ill health on his 53rd birthday. With interest his total negative DC balance at age 53 is £20,633. This means his 2008 Section ill health pension will be reduced by £1,030.62 (£20,633 / 20.02). There is no reduction to his lump sum. Example 3: 2015 Scheme Paul elected for Scheme Pays to pay his Annual Allowance charge of £47,000 and is retiring on his 72nd birthday. With interest his total negative DC balance at age 72 is £63,000. This means his 2015 Scheme late retirement age pension will be reduced by £4,424.16 (£63,000 / 14.24). There is no reduction to his lump sum. Example 4: Transition member Sarah elected for Scheme Pays to pay her Annual Allowance charge of £12,500; £10,500 was paid from the 1995/2008 Scheme and £2,000 from the 2015 Scheme. She is retiring from the 1995 Section at age 62 and taking her 2015 Scheme pension early with an actuarial reduction. With interest her total negative DC balance at age 62 in the 1995 Section is £12,000. This means her 1995 Section age pension will be reduced by £548.20 (£12,000 / 21.89) and her lump sum by £1,644.60 (£548.20 x 3). With interest her total negative DC balance at age 62 in the 2015 Scheme is £3,000. This means her 2015 Scheme actuarial reduced pension will be reduced by £158.81 (£3,000 / 18.89). There is no reduction to her lump sum. Annual Allowance - Scheme Pays recovery factors (09.2016) V1 3

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