Pensions

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Voluntary protection of pay FAQs

Frequently asked questions about voluntary protection of pay, including: What is it? How do I qualify? How will I benefit? How do I apply? These and other questions are answered.

 

What is Voluntary Protection of Pay?

This is a facility which allows you to reduce your work commitment by moving into a lesser paid role with fewer responsibilities whilst still protecting your previously accrued pension.

 

What do I need to do to use this facility?

In order to qualify for Voluntary Protection of Pay, you need to meet all of the following criteria:

  • You must be a member of the1995 section of the scheme/have transitioned to the 2015 CARE scheme having retained a final salary link to the 1995 section.
  • You must have at least two years calendar membership at the time of stepping down to a less demanding role.
  • You must have reached your minimum pension age (this is 50 for members in service on 5 April 2006 and 55 for members who joined the scheme after that date).
  • You must have stepped down to a less demanding role with less responsibility than your previous role. Your employer must confirm this.
  • Your pensionable pay must reduce by at least 10% for a period of at least one year before you can apply for step down. This needs to be verified by your employer.
  • Your pensionable pay must not have been reduced in the 12 months prior to the day you stepped down to a less demanding role.
  • You must apply after 12 months but within 15 months of the date that your pay was reduced.

 

How will I benefit from voluntary protection of pay?

When you retire (or leave the NHS pension scheme with deferred benefits) your pension s will be calculated on whichever one of the following two methods is more beneficial:

  1. A pension based on your protected rate of pay (plus inflationary increases) for your membership up to the date of protection and a second pension for your membership after that date calculated using the best of the last three years pensionable pay up to the date of leaving or retirement.
  2. A pension based on all your membership using the best of the last three years pensionable pay up to date of leaving or retirement.

An example of how this may work:

A doctor protected his pay at £120,000 on 1 July 2008 on ceasing his medical director post and meeting all the relevant criteria. He had 32 years of service on that day. When he retired on 1 July 2012, his pay was £100,000 and he had 36 years of service.

Had he not used voluntary protection of pay, his pension would have been:
36/80  *  £ 100,000  =  £ 45,000

But, because he protected his pay, his pension is now
32/80  *  £ 120,000  = £ 48,000
4/80  * £ 100,000 = £ 5,000 +
Total pension:    £ 53,000

 

Do I need to apply for Voluntary Protection of Pay if I stay in my current job but reduce my hours  or sessions?

No.  Your pensionable pay will still be calculated using your notional whole-time equivalent earnings.   Please see the FAQs on ‘pensionable pay’.

 

I am a GP.  Can I apply for Voluntary Protection of Pay?

No.  The pension benefits for GPs are based on your career earnings and not on your final pensionable pay.

 

Are there any time limits to apply for Voluntary Protection of Pay?

Yes.  You must apply no sooner than 12 months after the day you move to a less demanding role, but no later than 15 months after this day. You have a three month window in which to make your application.

 

How many times can I apply for Voluntary Protection of Pay?

You can only use this facility once.

 

Can I apply if I lose my on-call supplement?

Yes.  Providing your on-call supplement is worth more than 10% of your pay.

 

Can I apply if I lose my CEA/distinction award?

Yes. Providing your CEA/distinction award is worth more than 10% of your pay. However if you continue to carry out the same duties following the loss of the CEA/distinction award, you would not qualify for voluntary protection of pay as it requires a reduction in responsibility as well as pay.

This is not to be confused with the situation where CEAs cease to be pensionable when Pay Protection (rather than Voluntary Protection of Pay) would apply and guidance on this can be found on the Pensions Agencies website.

 

Can I apply if I give up my medical/clinical director duties?

Yes.  Providing your medical/clinical director supplement was pensionable and is worth more than 10% of your pay. However if you continue to carry out the same duties following the loss of the medical/clinical director supplement, you would not qualify for voluntary protection of pay as it requires a reduction in responsibility as well as pay.

 

Do I need to apply if I am forced to reduce my commitment following a period of ill-health?

No.  Providing the reduction in your pay is due to a change of duties following a period of ill health, you should be entitled to protection of pay (through no fault of the member).

 

Can I still apply after becoming a member of the 2015 scheme?

Yes, as long as you have not had a continuous break of five years or more in your membership service and therefore retained the final salary link to your 1995 section benefits, you are able to request voluntary protection of pensionable pay subject to meeting the relevant criteria. This protection will only be relevant to your 1995 section service.

 

How do I apply for Voluntary Protection of Pay?

You need to complete the appropriate application form. If you are contributing to the: