What is CARE?
So What Is a Career Averaged Re-valued Earnings (C.A.R.E.) Pension?
This is still a form of defined benefit pension scheme, which means you get a guaranteed level of benefit at retirement payable according to a fixed formula. This guarantee is extremely important in today’s world of insecurity and membership of the scheme should not be given up lightly. So below, please consider the Main Features of the C.A.R.E scheme
- The Build Up Rate – The amount of pension you gain each year is known as the ‘build up rate’ which is usually shown as a fraction of your pensionable pay. In the 2015 Scheme, the ‘build up rate’ is 1/54th. So for every £1,000 of pensionable pay you ‘earn’ £18.52 per annum of pension
- Re-Valuation – On the 6th April each year the total pension you have built up, is increased to take account of inflation. The 2015 Scheme is one of the best. BEFORE the new 1/54th is added the total pension is increased, currently by the Consumer Price Index (CPI) plus 1.5% every year. For example if you have a pension of £10,000p.a. and inflation was 5% then the £10,000p.a. would become £10,650, then the new 1/54th would be added and this happens EVERY year
- Membership – You can continue to build up pension rights in this Scheme until age 75 with no limit to the number of years’ earnings that can be taken into account. The more years pension you have then the bigger overall pension.
- Drawdown and continued membership – You can take some of your pension without the need to retire AND can continue to contribute to build up more pension again. There are rules and limits to this. Please contact PSS for details.
- Pensionable Pay – This is the amount of your income that represents your actual earnings for NHS work and is used to calculate the contributions you pay and how much pension you earn each year. In the 2015 Scheme your pensionable pay is not based on your Whole Time Equivalent pay as in the old scheme, rather your actual earnings after allowing for deductions such as salary sacrifice. These deductions can have a significant impact upon your final pension.