I have two NHS pensions from England and Scotland. Can I get a lump sum from each?

In our weekly series, readers can email in with any questions about retirement and pension savings to be answered by our expert, Tom Selby, director of public policy at investment platform AJ Bell. There is nothing he does not know about pensions. If you have a question for him, email us at money@theipaper.com. Question: I am 55 year old and at present working in Scotland as a GP. I have been working under NHS since 2004. My pension is split in between England and Scotland. Would my pension be in a single pot or separate for England and Scotland and is it possible for me to draw a lump sum as I am 55. Also who can I contact to find out more about my NHS Pension in England? Answer: As you are an NHS employee, your pension arrangements will almost certainly be “defined benefit” (DB), providing you with a promised income from your scheme’s “normal pension age” based on your salary and the number of years you have been a member of the scheme. For each year you are a member of the scheme, you build up an entitlement to a portion of your pensionable earnings as a guaranteed, inflation-protected retirement income. Shorts Since 2015, NHS workers in both England and Scotland have built up entitlements in a “career average” DB scheme with 1/54th accruals, with the normal pension age aligned to the state pension age. This means, for each year you are a member of the scheme, you build up an annual pension equal to 1/54th of that year’s pensionable earnings, payable from your scheme’s normal pension age. Assuming you have been a member for your entire NHS career, you will likely also have built up some “final salary” DB entitlements where your pension calculation is based on your salary at the end of your career, rather than the average. You will likely also have pensions with an earlier normal pension age of 65 (the 2008 scheme) or even 60 (the 1995 scheme). Your scheme administrator(s) should provide you with clear information of how much entitlement you have built up under each relevant scheme and an estimate of the income it should deliver in retirement. Turning to your first question, while the pension terms offered to NHS workers in England and Scotland are broadly similar, the schemes are legally separate and so you should get communications of the pensions built up under each. It’s important to note that because your pensions are DB, you build up an entitlement to an income – there is no ‘pot’ of money administered by each scheme. In relation to your second question, NHS workers aged 55 and over are entitled to take their lump sum early, although you will have to give up some of your promised retirement income in return. Generally, the NHS scheme requires you to give up £1 of pension income for every £12 of tax-free lump sum you receive. You should therefore think carefully about what you will do with the lump sum if you go down this road. For example, if you took the lump sum and left it sat in a low interest bank account, its value would be eroded over time by inflation. You also need to consider the impact reducing your pension income will have on your living standard in retirement. In terms of who to contact at NHS England, your starting point should be the NHS Business Services Authority. The website is https://www.nhsbsa.nhs.uk/nhs-pensions or you can call on 0300 330 1346. You’ll need your scheme details to hand but they should be able to provide information on things like pension estimates, lump sum options and benefit statements. You should make sure the scheme is aware of your current address and details so they can provide you with relevant information. Finally, given the complexity of your pension arrangements and the significance of any decision to take an early lump sum, I’d strongly recommend you consider taking professional financial advice to fully understand your options.