RETIREMENT POLICY NO. HRP31

RETIREMENT POLICY NO. HRP31 Applies to: All Staff Committee for Approval Education and Workforce Committee Date of Approval: 12/7/2011 Review Date: 12/7/2012 Name of Lead Manager Jo Harvey Version 2

Retirement Policy CONTENTS Paragraph Page 1 Introduction 2 2 Principles 2 3 Equality Impact Assessment 3 4 Good corporate citizen 3 5 Definitions 3 6 Responsibilities 3 6.1 Chief Executive 3 6.2 Director of HR and Corporate Affairs 3 6.3 HR Department 4 6.4 Heads of Service 4 6.5 Line Manager 4 6.6 Employee 4 7 Procedure 4 7.1 Age Retirement 4 8 Flexible Retirement Options 7 8.1 Option1: Wind Down 7 8.2 Option 2: Step Down 8 8.3 Option 3: Retire and Come Back 8 8.4 Option 4: Draw Down 9 8.5. Option 5: Late Retirement 10 9 Early Retirement on Grounds of Ill-Health 10 10 Planning Before Your Retirement 10 11 Support and Advice 11 12 NHS Retirement Fellowship 11 13 Consultation with Stakeholders 11 14 Dissemination 12 15 Implementation 12 16 Approval & Ratification 12 17 Review 12 18 Document Control & Archiving 12 19 Process for monitoring effective implementation 12 20 Other relevant procedural documents 13 21 Useful Contacts 13 22 References 13 Appendices Appendix 1 State Pension 15 1

Retirement Policy 1 INTRODUCTION Wirral Community NHS Trust recognises that its success depends on its ability to attract, recruit and retain suitably qualified, skilled and experienced staff, particularly as the demand for healthcare grows. The Trust also recognises the importance of supporting its staff to achieve a balance between their work and home life not just during employment but also in planning the transition to retirement at a time and pace which suits the individual and the organisational needs/demands. The policy applies to all directly employed Trust staff irrespective of contracted hours, band, status or gender. The aims of the policy are: To allow sufficient flexibility in terms of the options for retirement to accommodate the needs of the service and those of the individual, Increase age diversity in the workplace, To retain skilled and able workers, To aid in workforce planning, To provide guidance so that managers and staff are aware of the options that are available and the ability of the individual to make choices about the way in which they wish to retire and their eventual retirement, To clarify the rights of the individual and the organisation, To meet the extended working requirements of the Employment Equality (Age) Regulations 2006, Increase employee commitment and loyalty through enabling more ownership of length of working lives. 2 PRINCIPLES Wirral Community NHS Trust encourages staff to prepare for their retirement both financially and personally and wishes to provide support to staff considering retirement, Procedures detailed in section 7 of this policy should be followed in order to facilitate a smooth transition from work to retirement, For the purpose of this policy and procedure, retirement is defined as applying from the time when an individual draws a state and/or NHS Pension, Wirral Community NHS Trust is keen to retain the valuable skills of its staff wherever possible. Staff considering retirement can consider the flexible retirement options outlined in section 8 of this policy and in the Flexible Working Policy (HRP6) as a way of reducing work commitments rather than stopping altogether, 2

This policy covers all employees within Wirral Community NHS Trust (and will supersede all other retirement policies under previous terms and conditions of employment held by individuals who have transferred into Wirral Community NHS Trust from other NHS organisations), Wirral Community NHS Trust will ensure that the application of any part of this policy does not have the effect of discriminating, directly or indirectly, against staff on the grounds of race, colour, age, nationality, ethnic origin, sex, sexual orientation, marital status, religious belief or disability. The application of this policy will apply equally to full and part time staff, This policy was accurate as at April 2011 but provisions relating to national pension arrangements may be subject to change. 3 EQUALITY IMPACT ASSESSMENT As part of its development, this policy and its impact on equality have been reviewed in consultation with trade union and other employee representatives in line with the Authority s Equality Scheme. The purpose of the assessment is to minimize and if possible remove and disproportionate impact on employees on the grounds of race, sex, disability, age, sexual orientation or religious or other belief. No other detriment was identified. 4 GOOD CORPORATE CITIZEN Employment and skills is one of the six strands of the Good Corporate Citizen model and removing our default retirement age supports a diverse and sustainable workforce and society and broadens the choices available to employees. 5 DEFINITIONS Abatement decrease. 6 RESPONSIBILITIES 6.1 Chief Executive The Chief Executive has overarching responsibility for ensuring the content of this policy is applied consistently and fairly across the organisation. 6.2 Director of HR and Corporate Affairs The Director of HR and Corporate Affairs is the named officer responsible for ensuring the content of this policy is applied fairly and consistently across the organisation. 6.3 HR Department 3

The HR department is responsible for providing accurate and timely advice to managers and employees to ensure the policy is appropriately utilised across the organisation. 6.4 Head of Service The Head of Service is responsible for considering the impact this policy may have on restructures or redesign of teams and departments within their service. They are also responsible for overseeing the dissemination of implementation of this policy across their service. 6.5 Line Manager Line managers and team leaders are responsible for the dissemination and implementation of this policy within their teams. 6.6 Employee Employees are responsible for taking due consideration of this policy. 7 PROCEDURE 7.1 AGE RETIREMENT 7.1.1 Trust Retirement Age In response to the Government announcement in January 2011 that it will remove the default retirement age (DRA) in 2011, Wirral Community NHS Trust has removed its default retirement age of 65. Therefore, Wirral Community NHS Trust has no requirement for staff to retire at a particular age (there are separate provisions for medical staff) so the decision about whether to retire is a matter for each individual employee. It is recommended that staff consider the details of state pension arrangements contained in appendix 1. 7.1.2 NHS Pension Retirement Age & Benefits The minimum pension age is changing for any member who joined the NHS Pension Scheme for the first time on or after 6 April 2006, or who rejoined on or after 6 April 2006 and had previously left before 1 April 2000. 7.1.3 1995 Section Under the 1995 section of the NHS Pension Scheme, normal age retirement is at age 60 and with effect from 6 April 2010 the minimum pension age is 55, but benefits will be reduced to cover the extra cost of receiving a pension for a longer period. 4

7.1.4 2008 Section The 2008 section of the NHS Pension Scheme allows normal age retirement at age 65. Members can opt for voluntary early retirement from age 55, however, benefits will be reduced to cover the extra cost of receiving a pension for a longer period. 7.1.5 Retirement at the Age of 55 (Special Class Status) Special Class status applies to female nurses including District Health and Health Care Assistant s (not Auxiliary/Assistant), Female Midwives, Female Physiotherapists (all service) and Male Nurses for scheme membership from 17th May 1990 (this date has been designated arising from Sex Discrimination claims) only, service prior to this date can be taken as Voluntary Early Retirement and abated accordingly or preserved to 60 and paid in full. 7.1.6 Voluntary Retirement from the age of 50 Staff in the existing scheme can choose to retire at anytime from the age of 50, but if they choose to do so the value of their pension will be reduced to the following amounts. Age 59 58 57 56 55 54 53 52 51 50 Pension 94% 89% 84% 80% 75% 72% 68% 65% 62% 60% Lump Sum 97% 94% 92% 89% 86% 84% 82% 79% 77% 75% Staff in the special classes who can retire on full pension at the age of 55 will have their pensions reduced by the rates on this chart if they choose to retire between the ages of 50 and 54. These arrangements apply to the standard pension payments. For advice on the effect on added years/pension and additional voluntary contributions, staff should contact the Pensions Advisor on 01244 364455 and request a forecast of benefits. Staff in the new NHS pension Scheme (joined after 1st April 2008) may only choose to retire from the age of 55 and should seek a forecast of benefits to determine the relevant actuarial reduction before deciding to retire. 7.1.7 Benefits Staff are advised to familiarise themselves with the benefits of the NHS Pension Scheme so that they can make an informed choice about whether the scheme is appropriate for them. The benefits of the NHS Pension Scheme are only available to those who choose to join the scheme and make appropriate contributions. Pensions are based on years of contribution and final salary. Staff 5

can join the NHS pension scheme at any stage during employment with the NHS. There are also provisions within this scheme to buy additional pension and/or additional voluntary contributions. Staff who are members of the NHS Pension Scheme will receive retirement benefits, which consist of an annual pension paid for life and a tax-free lump sum. The amount received depends on the individuals pensionable pay, how long they have been a member of the scheme and whether they have worked part-time. Pensions are important for ill health retirement, early retirement on the grounds of efficiency of the service as well as normal retirement. Detailed information about the scheme and relevant forms may be found at www.pensions.nhsbsa.nhs.uk 7.1.8 National Insurance Contributions If someone works for an employer when they have passed their State Pension age: They don't have to pay Class 1 or Class 2 National Insurance contributions if they carry on working, They will only have to pay contributions on any earnings that were due to be paid to them before they reached State Pension age, Their employer must continue to pay contributions for them as they would have done had they been under State Pension age; and If they stay in employment or self-employment after State Pension age they can apply for an Age Exception Certificate so that they do not pay National Insurance contributions, The Department of Work and Pensions will send them a Certificate of Age Exception (form CA4141) to give to their employer so they know the person does not have to pay Class 1 National Insurance contributions. A person can also get this certificate if they decide not to claim their state pension straight away for example, if they want to put off claiming it to qualify for extra State pension. In this case they must contact HMRC to obtain a certificate. Staff should call 0845 302 1479 for more information staff may need to provide evidence of their date of birth. If staff have more than one employer, each employer will need a certificate. If a married woman or a widow has either a certificate of election or a certificate of reduced liability for contributions, they should return it to HMRC when they reach State Pension age. If the employer continues to take contributions from the employee s earnings after they have reached State Pension age, the employee must give the employer a Certificate of Age Exception, if they have not already done so (see above). They must also ask the employer to pay back to them the overpaid contributions. 6

7.1.9 Income Tax Staff are reminded that receipt of a pension forms part of your income and is therefore taxable depending on the level of income. 7.2.0 Notice Requirements Where an employee is intending to retire under the provisions of the NHS Pension Scheme, whether taking normal age retirement or voluntary early retirement, it is necessary for the member of staff to provide 4 months notice (or their contractual notice if this is greater), in writing, of their intention to retire, in order to ensure that the relevant documentation is processed for calculation of final pension figures in order to arrange payment, as should non NHS Pension Scheme members. 8 FLEXIBLE RETIREMENT OPTIONS 8.1 Option1: Wind Down As an alternative to simply retiring, staff may wish to discuss with their manager the possibility of working fewer days in their existing post. Although this may have an impact on how benefits are accrued. 8.1.1 Impact on Benefits Pensions for part time staff are calculated on the whole time equivalent salary, so moving from full time to part time work, rather than retiring, should not reduce the level of pensionable pay for the calculation of pension benefits. However, it will reduce the rate at which members build up future membership. 8.1.2 1995 Section Benefits are calculated on the basis of 1/80th of the best of the last three year s pensionable pay for each year of pensionable membership. 8.1.3 2008 Section Benefits are calculated on the basis of 1/60th of annual average of best three consecutive years pensionable pay, within the last ten years of pensionable service. 8.2 Option 2: Step Down In some instances staff may be considering retiring due to the pressure and responsibilities of their current role. By agreement with the employee s manager, 7

staff may be able to step down into a lower banded and therefore lower paid and less demanding post, which will still make use of their skills and experience. 8.2.1 Impact on Benefits The level of pensionable pay can be protected for the calculation of pension benefits for staff who are over the minimum retirement age provided they notify the pensions advisor of their intentions. 8.2.2 1995 Section If a member is over the minimum retirement age 50 (55 for some members) and their pay is reduced by a minimum of 10% they can apply for the higher rate of pay to be protected for pension purposes. Members must apply for protection within 15 months of reduction. Benefits are calculated on the basis of 1/80th of the best of the last three year s pensionable pay for each year of pensionable membership. 8.2.3 2008 Section If a member is over the minimum retirement age 55 they can consider moving towards retirement by switching to a less demanding role. The member s reckonable pay will still consider any higher earnings they may have had in the 10 years prior to their retirement date. Benefits are calculated on the basis of 1/60th of annual average of best three consecutive years pensionable pay, within the last ten years of pensionable salary. 8.3 Option 3: Retire and Come Back Members who have reached the minimum retirement age can also opt to retire, take all their pension benefits and return to NHS employment. Unless the staff member indicates otherwise, the employee will continue in post as normal following retirement and a two week break in service on reduced hours as detailed below. Other options available include resigning from their substantive post at the point of retirement and registering on the Nurse Bank, then opting to work on an as and when basis, giving an opportunity to pick and choose the hours worked. 8.3.1 1995 Section If a member joined the 1995 section before 6 April 2006 the minimum retirement age is 50. If the member joined the 1995 section on or after 6 April 2009 their minimum retirement age will change to 55 on 6 April 2010. If a member returned to the Scheme after 6 April 2006 this may also apply to them. Pensionable reemployment only if the member retires on ill-health grounds, draws a pension and returns to NHS employment under age 50. If the member left NHS pensionable employment after 1 April 2008 and retires before the 'choice' exercise they will be 8

eligible for pensionable re-employment in the 2008 Section but they must wait two years after retirement before they can join. The Trust requires the employee to take a 2 week (14 day) break before returning back to employment and work less than 16 hours per week in the first calendar month to avoid their pension being suspended in line with the NHS Pension Scheme rules. Abatement applies if the member is re-employed under age 60 and pension was not reduced due to voluntary early retirement. 8.3.2 2008 Section The minimum retirement age in the 2008 section is 55. The Trust requires the employee to take a 2 week (14 day) break before returning back to employment but their pension will not be suspended if they work more than 16 hours per week in the first calendar month. Abatement applies if the member was re-employed under age 65 and pension was not reduced due to voluntary early retirement. 8.4 Option 4: Draw Down This is only open to members of the 2008 section of the NHS Pension Scheme. This option allows members to take part of their pension benefits whilst continuing in NHS employment. 8.4.1 Impact on Benefits If members are over the minimum retirement age of 55 and their pay is reduced by a minimum of 10% they can partially retire and take some pension benefits. Members can take 20% - 80% of their pension entitlement and continue to build up future membership. The member s benefits would be reduced if they are paid before their 65th birthday. Pensionable pay must remain reduced for at least a year otherwise they will cease to be eligible for the pension they have taken. Members can draw down benefits twice before retiring completely. 8.5 Option 5: Late Retirement This option is open to all members of the NHS Pension Scheme. 8.5.1 1995 Section For members of the 1995 Section, this option means that if they choose to retire later than their 60th birthday, they can continue to earn pension, but no increase is applied for retiring late. 8.5.2 2008 Section For members of the 2008 Section of the NHS Pension Scheme, this option means that if they choose to retire later than their 65th birthday, the pension 9

benefits earned before age 65 will be increased by the application of late retirement factors: the later they retire, the greater the increase. 9 EARLY RETIREMENT ON GROUNDS OF ILL HEALTH Ill-health may unfortunately occur during any stage of employment (please see the Managing Attendance Policy HRP5). There are two tiers of ill-health retirement. If an employee becomes permanently incapable of performing their current job due to ill-health they may receive a pension calculated in the same way as a normal retirement pension but unreduced to take into account of early payment. Alternatively if an employee s illness makes them permanently incapable of any regular work the pension is calculated after first increasing actual membership by two-thirds of the membership that would have accrued if the employee had continued until normal retirement age. It is important to note that the decision on an ill-health Retirement application rests solely with the NHS Pensions Agency. 10 PLANNING BEFORE YOUR RETIREMENT All staff should carefully consider making adequate financial provision for their retirement, whether they choose to belong to the NHS Pension Scheme or not. Staff should consider planning for retirement at least 5 years beforehand as retirement involves a change in lifestyle and may take time to plan. Staff are also advised to seek independent financial advice about their retirement options and benefits before making any final decisions. Because there is a potentially long period of time during which someone can choose to retire, it is difficult for their manager to predict when they may need support and advice. Wirral Community NHS Trust therefore will rely on staff to initiate the planning process and to discuss the subject of retirement with their manager when they feel it is appropriate. It is important to note that managers may reasonably want to know about an employee s future aims and aspirations and may ask staff about their plans as part of an annual appraisal meeting. Once a member of staff has indicated that they wish to retire the manager can talk to them about the date for their retirement and any adjustments they may wish to make to their working arrangements, hours or change in role in the lead up to retirement. 11 SUPPORT AND ADVICE Approximately two to five years before retirement, staff may access a preretirement course, details of which are available from the Quality and Governance Unit. If individual pensions advice is required at any time then this can also be 10

sought from the advisors at Pensions in the Payroll department on 01244 364455. 12 NHS RETIREMENT FELLOWSHIP The NHS Retirement Fellowship is a registered charity, created in 1978 for the benefit of all employees of the NHS, together with their partners. Thousands of Fellowship members enjoy a range of social, leisure, educational and welfare activities through a network of branches across the UK. The branch provides a venue for healthcare staff to continue friendships formed during employment and offers the opportunity for individuals to make new friends and enjoy companionship of people from a shared NHS background. Members come from all sections of the NHS. Branch membership and national membership entitles you to the full range of benefits. If you have any queries about the Fellowship, visit http://www.nhsrf.org.uk. 13 CONSULTATION WITH STAKEHOLDERS In order to achieve publication, due consideration has been made to the stakeholder groups (employees via trade union and professional representatives, managers and HR professionals) who will be using or who will be affected by this policy. They have been consulted with and their comments incorporated into the final version. 14 DISSEMINATION The draft policy has been discussed, amended and approved by the HR policy review group, which consists of members of staff side organisations, senior HR representatives and senior managers. 15 IMPLEMENTATION It is not anticipated that this policy will create any training or support issues over and above the provisions currently provided by the HR department. 16 APPROVAL AND RATIFICATION Once the members of the HR policy review group are satisfied that this policy meets all the criteria in order to be publicised, it is escalated for consideration by the Education and Workforce Committee. When the policy is approved, it is considered to have been ratified and is then cascaded to managers across the organisation for storage in their policy files and published on the Intranet site. 17 REVIEW 11

This policy is subject to periodic review by the HR Policy Review Group which has delegated authority from the Education and Workforce Committee. 18 DOCUMENT CONTROL AND ARCHIVING If, following review, it is decided that this policy should be superseded by another and archived, this version will be removed from the Intranet site and replaced, and stored within the shared files in the HR system. Managers will be requested to destroy their copies of the archived document held in their files and to replace it with the updated policy. 19 PROCESS FOR MONITORING EFFECTIVE IMPLEMENTATION 19.1 It is not anticipated that this policy will create any training or support issues over and above the provisions currently provided by the HR Department. 20 OTHER RELEVANT PROCEDURAL DOCUMENTS Flexible Working Policy (HRP6) Managing Attendance Policy (HRP5) Guidance to Relation to Retirement Functions (Funding) and the Long Service Award Scheme (HRG13) 21 USEFUL CONTACTS 21.1 NHS Pensions Helpline For more detailed information on the individual s pension position staff can call the NHS Pensions helpline on 01253 774440. They will need to have their national insurance number available. Website: www.nhsbsa.nhs.uk/pensions.aspx 21.2 NHS Pensioners Trust The objective of the Pensioners Trust is to relieve hardship among beneficiaries (Any NHS retired staff or husband, wife, widow, or widower of retired NHS staff). The Trust can be contacted on 020 7307 2506. 21.3 NHS Retirement Fellowship A self-help organisation catering specifically for retired NHS staff. Its aim is to encourage friendship and relieve loneliness and worry for retired NHS staff. The Fellowship can be contacted on 01305 361317 or visit http://www.nhsrf.org.uk 12

21.4 Pensions Ann Molyneux is the Pensions Development Manager based in the Payroll Department, Moston Lodge, Countess of Chester Hospital, CH2 1UL on telephone number 01244 364455. 22 REFERENCES NHS Employers - http://www.nhsemployers.org/payandcontracts/nhspensionschemereview/age/ defaultretirementageconsultation/pages/defaultretiremenageconsultation.aspx. NHS Employers http://www.nhsemployers.org/payandcontracts/nhspensionschemereview/pen sionchoice/pages/pensionschemeflexibilities.aspx. ACAS http://www.acas.org.uk/index.aspx?articleid=3203. Direct Gov http://www.direct.gov.uk/en/pensionsandretirementplanning/working/workingtos uityou/dg_184309. Age UK http://www.ageuk.org.uk/documents/en- GB/FS19The_State_Pension_fcs.pdf?dtrk=true. 13

APPENDIX 1 STATE PENSION State Retirement Pension The State Pension is paid to people who have reached State Pension age, who fulfil the National Insurance (NI) contribution conditions and have made a claim of their state pension. The amount they get is not affected by their income and savings but all parts of the State Pension are taxable. Some major changes to State Pensions were introduced on 6 April 2010. They included the start of a process to equalise State Pension age for men and women, and other changes that apply only to people who reach State Pension age on or after 6 April 2010. They can claim and get their State Pension even if they decide to continue working past State Pension age. Alternatively, they can choose not to claim their State Pension at State Pension age and get extra State Pension or a one-off taxable lump-sum payment at a later date. State Pension may consist of a basic Category A or B State Pension plus Additional State Pension (based on their NI contributions after April 1978) and Graduated Retirement Benefit (based on their NI contributions between April 1961 and April 1975). They will get an extra 25p each week when they reach the age of 80. The Category D State Pension is a non-contributory pension for people over the age of 80. They can claim their State Pension when they reach State Pension age. Before April 2010 State Pension age was 65 for men and 60 for women. Since 6 April 2010 women s State Pension age has been increasing for those born on or after 6 April 1950. As at April 2011, women s State Pension age is around 60 and 6 months and it will be 61 by April 2012. Under current legislation, State Pension age is due to be equalised at 65 for both men and women by April 2020. It is then scheduled to increase again, to 68 for both men and women between 2024 and 2046, affecting anyone born after 5 April 1959. However, these timetables may be revised if proposals contained in a new Pensions Bill are agreed. The government proposes to accelerate the rate of increase in women s State Pension age so that equalisation at age 65 is achieved by November 2018. There is also a proposal to bring forward the next phased increase, so that the State Pension age for both men and women will increase to 66 between December 2018 and April 2020. 14

They may not need the income from their State Pension immediately because, for example, they intend to carry on working. They can: Claim State Pension while they carry on working (their earnings will not affect the amount of State Pension they get but, as State Pension counts as income for tax purposes, claiming State Pension may affect the amount of tax they have to pay) Retire from work and claim their State Pension or Put off claiming State Pension for a while to get either extra State Pension or a one-off taxable lump-sum payment when they do claim, whether they carry on working or not. If they decide to put off claiming State Pension, their options when they finally claim will depend on how long they put it off for. To get extra State Pension they have to put off claiming for at least five weeks. They build up extra State Pension at 1% of their normal weekly State Pension rate for every five weeks they put off claiming (this is equivalent to about 10.4% extra for every full year they put off claiming). The amount of extra State Pension they receive when they claim it is calculated by adding up all the extra State Pension accrued. It is not compounded and should not be seen as interest. Extra State Pension is paid on top of their normal weekly State Pension from when they start claiming it, and continues for as long as they are getting State Pension. Extra State Pension is increased each April in line with increases to their State Pension. http://www.direct.gov.uk/en/pensionsandretirementplanning/statepension/i ndex.htm - This website provides information and details of eligibility for State Benefits, including access to a state pension age calculator. 15