What are the implications if a member switches from one NHS Pension Scheme to another?
Pensions can be confusing for most of us. Within the NHS it is even more complex, with different parts of the UK having their own NHS pension scheme administration.
The NHS Business Services Authority (NHSBSA) are responsible for administering the NHS Pension in England and Wales. In Scotland, it’s the Scottish Public Pensions Agency (SPPA). In Northern Ireland, it’s Health and Social Care (HSC).
Each Nation’s scheme works in a similar way, with a few minor differences. Members can switch from one to the other, but there are implications worth being aware of.
Why switch pension schemes?
One of the most common reasons for an NHS employee to move from one scheme to another is if they get a new job.
Do I have to switch schemes?
No, switching isn’t always necessary. When starting a new job in either Scotland or Northern Ireland, you can decide whether you want to transfer your service from England to Scotland or Northern Ireland, or just leave it where it is.
What happens if I switch pension schemes?
If, as an NHS employee, you decide to make the move from England to become a consultant in Scotland, you will automatically become a deferred member of the NHS Pension Scheme England and Wales, as you will no longer be contributing to the scheme. You will also join the Scottish Public Pensions Agency (SPPA) scheme.
Can I switch to a non-NHS scheme?
Yes. However, if you’re transferring to a non-NHS Pension Scheme then the transfer must take place within 12 months of you joining the new scheme.
Do any rules apply to switching to another NHS Pension Scheme?
When transferring from one NHS Pension Scheme to another, you should make sure the switch is finalised within 12 months. However, there is flexibility and, in some cases, you may have one or more years to make a decision.
Is there anything I should be aware of?
Although many people assume there’s an automatic link between their old and new scheme, there isn’t. If you don’t transfer your benefits from one scheme to the other, you could lose out on final salary linking.
Example:
Harry Johns worked as an NHS dentist and was previously a member of the 1995 Section in England where his pensionable salary was £50,000.
In 2015, he transitioned from the 1995 Section to the 2015 NHS Pension Scheme.
- In 2019, he moved to Scotland to become a consultant with a new salary of £75,000.
- After his move, Harry decided not to transfer his 1995 benefits, which meant that the linking between his previous pensionable salary of £50,000 and his new pensionable salary of £75,000 didn’t happen.
- As a result, the service he’d accrued in the 1995 Section will increase only by inflation, as opposed to being linked to his final salary in Scotland of £75,000.
- If Harry had decided to transfer his benefits from England and Wales to Scotland, everything would be treated as one scheme.
- The 1995 Section benefits would have been transferred into the Scotland 1995 Section and the 2015 Scheme benefits would have been transferred into the Scotland 2015 Scheme. He would have also benefitted from final salary linking.
Would I benefit from seeking financial advice before I switch schemes?
Opting to switch to another pension scheme is a big decision that could impact on your future plans. There are both benefits and disadvantages, depending upon your individual circumstances, which need to be fully explored.
An independent qualified adviser with experience of the NHS Pension Scheme will be able to carefully guide you through all of the options available to you.
Content correct at time of writing and is intended for general information only and should not be construed as advice.