NHS Pension Scheme
The NHS Pension Scheme is a large pension scheme for people who work for the English NHS and NHS Wales. It is administered by the NHS Business Services Authority, a special health authority of the Department of Health of the United Kingdom.
The main benefits and conditions of the scheme are explained in the NHS Pensions document Scheme Guide - NHS Pension Scheme . The benefits and conditions vary according to the type of worker and the dates of their service; from 2008 the "Normal Retirement Age" changed from 60 years to 65 years while the proportion of pay upon which a pension is based was increased. The benefits are index-linked and guaranteed. They are based on final salary (members who joined before 1 April 2008) or average salary (members who joined after 1 April 2008) and years of membership of the scheme. There are no administration costs. Members can increase their contributions if they wish to get larger benefits (within certain limits).
The NHS pension scheme is currently in surplus and has been in net surplus for the past 17 years in the order of £11 billion . (Please note that the table in the link shows net cashflows to be positive, i.e. contributions to the scheme being greater than benefits outgo, and not the funding level of the scheme. A positive net cashflow is entirely different from a pension scheme being in surplus. In order for a scheme to be in surplus the total assets held must be greater than the total present value of benefits due to all members - the liabilities. The NHS Pension Scheme is an unfunded scheme backed by the Exchequer; it does not hold any assets. As such the scheme cannot be in surplus. The liabilities of the NHS Pension Scheme as at 31 March 2013 were calculated by the Government Actuaries Department to stand at £284.2 billion, an increase of £37.2 billion from the liabilities at 31 March 2012 of £247.0 billion . Total contributions to the scheme were £9.2 billion and benefit payments of £10.3 billion for the year 2012-13.)
The office of budget reporting revised sharply their predictions for pension receipts last year to predict a deficit by 2013-14, instead of 2016 as predicted the year before . The downturn was ascribed to frozen public sector salaries and hence pension receipts as well as higher than normal employees taking early retirement .