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