A fair number of the 49,785¹ Consultants in the UK qualified from universities north of the border. Even though many of these Consultants – and for that matter other Scottish qualified medics – would have accrued service in the NHS Scotland Pension Scheme, it is surprising how many have either forgotten about their NHS Scotland pension or have done nothing about it.
Whether Scotland remains part of the UK or not, you cannot afford to ignore any pension you have in the NHS Scotland Pension Scheme!
Isn’t the NHS Scotland Pension Scheme identical to the England & Wales Scheme?
Yes, the two pension schemes are virtually identical – both as final salary schemes (which they were) and as career average schemes (which they are now). However, the “difference” is that any service you have remaining in the NHS Scotland Scheme is treated as a separate pension, even if you are now a member of the NHS England & Wales Scheme.
How much difference could combining my NHS Scotland and my NHS England & Wales pensions make?
Let’s say you’re a Consultant with 5 years of membership in the NHS Scotland Pension Scheme (1995 section), you leave to join the NHS Pension Scheme in England and your pensionable income at the time of leaving is £25,000.
Under the rules of the NHS Scotland Scheme, as a deferred member your annual pension would be £1,562 a year (5/80ths of £25,000). This deferred pension would potentially increase each year by inflation² until retirement. After 30 years, it could be worth £2,106 a year.
If you joined the NHS England & Wales Pension Scheme within 5 years of leaving the Scottish NHS Pension Scheme, your Scottish pension membership could be transferred into the 1995 section of your England & Wales pension membership (as long as you haven’t switched into the 2015 section).
Because your pension will be based on your final salary as a member of the NHS England & Wales Scheme, your pension could grow to £6,404 a year (5/80ths of £102,465³). That’s a difference of £4,298 a year in pension and £12,894 of additional lump sum. It would be even more with CEA awards.
If you have already switched into the 2015 section, it is possible to transfer your Scottish NHS pension membership to this section, but you will be subject to the new rules.
On top of all this, when you build in the higher death in service lump sum, greater ill health retirement pension and more dependent benefits of the NHS Scotland Pension Scheme, can you afford to do nothing?
Annual allowance and lifetime allowance considerations
The calculation of annual allowance and lifetime taxation issues rely upon all of your pensions, both current and historic, and should be included in any pension related matters. Don’t ignore this or any other small pension as it could come back to bite you in the future.
Are there any downsides to combining my NHS Scotland and my NHS England & Wales pensions?
By combining your two NHS pensions, you may well be increasing your pension. Any increase in your pension:
- Could affect your annual allowance and lifetime allowance position so this needs to be checked as a matter of course;
- Should not dramatically impact your retirement planning.
There are also rare occasions when combining your two NHS pensions will have an adverse effect on your pension. It all depends on what your final salary is, how long it is before you retire, inflation rates, and any cost of living increases when applied to your deferred Scottish NHS pension.
You should note too that, if more than 12 months have elapsed since you joined the NHS England & Wales Pension Scheme, the automatic acceptance of your NHS Scotland pension transfer is no longer guaranteed. If the transfer is rejected you can appeal the decision, especially if you feel that your options were not explained or made known to you when you left the NHS Scotland Scheme.
So what should you do next?
As with any financial decision you should speak to your independent financial adviser before doing anything. When you do, you will need to know your Scotland NHS Pension membership number and your accrued pension benefits.
If you don’t have your Scotland NHS Pension membership number, you can call the Scottish Public Pensions Agency on 01896 893 000 with your name, date of birth and national insurance number. They should be able to trace you if you have service, and give you your membership number.
Once you have your membership number, you can then send a quick email to email@example.com and ask them for your accrued benefits.
It is a simple process but, if you have any problems or questions, do get in touch with us.
¹ Specialist information; ² Assumed inflation 1%; ³ Threshold 8 Consultant