In April, the new NHS pension 2015 will be introduced. No longer based on final salary, it will run as a Career Average Revalued Earnings (CARE) scheme and have a much later normal retirement age.

Approximately 75% of existing NHS employees and all new employees will join ‘2015 NHSPS’ but the majority of senior doctors aged 50 or over will be exempt. This has not stopped letters being sent to those scheme members by the NHS Pensions Agency which has caused widespread confusion.

In general terms, medical professionals born after 1962 could be affected and will automatically move to the new scheme for their future service only. Individuals born before this date will either be exempted altogether and remain members of the 1995 or 2008 pensions or will be subject to ‘tapering protection’. They will still have to join 2015 NHSPS but their joining date will be delayed, depending on how close to their normal pension age they were on 1 April 2012.

Under the terms of the new agreement, 1/54th of pensionable earnings will be added to the individual’s pension account annually and each year the total accrued pension account will be revalued in line with inflation (currently the Consumer Price Index) plus 1.5% to reflect a measure of pay growth. The normal pension age will be the same as the person’s state pension age. Tax-free lump sums will only be available by giving up valuable index-linked pension income at retirement.

For younger members this adds complexity and means that more needs to be added to the retirement pot now in other ways if you want to be financially independent and retain some control over your own retirement age.

Have you received a letter from the NHS Pensions Agency? Do your finances need a second opinion? Call one of our specialist advisers on 020 7636 7006.