As NHS professionals you should all be aware you have online access to your NHS Total Reward Statement. However, have you ever wondered what the hypothetical annuity cost is on your NHS Total Reward Statement (TRS)? Or why the financial summary seems to bear no relationship to your income?
Your TRS is available to view annually from August each year. Your NHS Total Reward Statement is accessible via your Trust’s Electronic Staff Record Programme (ESR) or from the TRS website. Once you are logged in hopefully you can navigate through, and understand the information you require.
Need a bit of help?
We are aware many of our NHS medical clients are finding it challenging to navigate through their Total Reward Statement to obtain the information they need.
Let us guide you through and explain some of the most relevant information it holds. There is often a misconception that the TRS contains information on your annual allowance – this is not the case. The annual allowance is a separate statement that will be sent if you breach the allowance, or can be requested from the pension’s agency.
Now that’s cleared up, let’s start…
Personal details & financial summary
Your NHS Total Reward Statement begins with your personal details on the top of the page followed by your financial summary. This section is self-explanatory, as it breaks down how your total income is split; be that from banding, on call, additional programmed activities through to awards. It should be based on the previous tax-year. If this is not the case then the pension agency may not have your up to date information, so may be worth investigating! For GP partners, it may be older due to the time lag for preparing and submitting accounts.
Employer pension contributions also appear under “Total Reward Package”, hence the reason you may feel the total income is higher than you were expecting.
Annual benefit statement
This is in relation to your pension and will separate out the different NHS pension schemes if you are a member of more than one. There are some points worth checking.
Firstly, ensure the date you joined the scheme is accurate, along with your pay. The pay will not necessarily correspond to your payslip as the NHS TRS should be showing the previous tax year’s income. The pay should be reflective of all superannuated income.
Secondly, you will see an “updated to” box which acts as a curve ball for many as the date is typically in the past for the 1995 and 2008 schemes. It will have the date up to which you remained in that pension scheme. In the case of the 1995 or 2008 pension scheme this will be the point at which you joined the 2015 pension scheme.
If you are a member of the 2015 scheme as well, then you will need to scroll on a few pages to find the same box. It will have the date you joined the new scheme, which should correspond with the ‘update to’ box on the previous pension section. The 2015 pension scheme pay in many cases will look different to the previous pension pay as the 2015 is worked out as a career average pension. For many the pay will be lower than the actual pay due to the averaging impact over time.
Next is the ‘Standard Benefits’ table which gives an estimate of what your pension would be worth if you retired now at the normal pension age and accompanying benefits.
This amount is what you would get annually if you were to currently retire at the normal pension age.
This figure is the amount you can withdraw as one lump sum at the normal retirement age.
The schemes allow you to sacrifice some income to increase your maximum lump sum. You will see a box below that details the maximum lump sum that can be taken and the impact this has on the income. You can elect to take a lump anywhere between these two extremes. The eagle eyed amongst you will notice that it doesn’t state tax free lump sum! The reason behind this is that there are limitations on the maximum lump sum that can be drawn tax free, which in some instances can be less than the maximum lump sum.
Adult dependent pension
This amount relates to how much a partner or dependant can get on an annual basis if the member were to die. The member needs to be actively contributing to the NHS pension at the time of death. This figure is only an estimate as the exact amount will vary depending on many circumstances. Children may be eligible for a children’s pension which they will receive up to their 23rd birthday.
Reckonable membership and calendar membership
The reckonable membership is the one that you need to pay attention to. This is the time that will be used for the basis of your pension calculations.
Hypothetical annuity cost
This is often mistaken for the value of the pension for lifetime allowance purposes. This is actually a rough estimate of how much a comparable pension would cost if bought privately and annuitised instead of through the NHS pension scheme. It has little bearing on anything.
These benefits are aimed at providing aid to dependents in the event of the pension holder’s death. It will detail if there are any nominations recorded for the benefit. By default, this would be a spouse or civil partner. If there is no eligible nomination, the lump sum will be paid to the member’s estate and shared according to their will.
Death benefit nominations
The next section entitled ‘Death Benefit Nominations’ states who is currently nominated to receive these death benefits.
Pensionable earnings statement
This final section shows you how much you have accumulated in your pension benefits year on year. The revaluation number is a percentage figure, consisting of an estimate of inflation from the treasury, plus another 2%.
Assuming the McCloud age discrimination case goes through and members will revert to their legacy scheme prior to March 2022, we expect the TRS to change dramatically. It would be prudent to retain a copy of your NHS TRS prior to the changes, giving you the ability to reference data should there be any errors.
If you are still struggling to understand your NHS Total Reward Statement or you have any questions, please do get in touch and we will do our best to help.
Do you check and understand your NHS Total Reward Statement? Let us know by leaving a comment below