So What Is a Career Averaged Re-valued Earnings (C.A.R.E.) Pension?

Despite the fact that nobody likes change it is important to remember that 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 earn each year is determined by what is known as the ‘build up rate’ which is usually shown as a fraction of your pensionable pay. In the New 2015 Scheme, the ‘build up rate’ is 1/54th, so you earn a pension each year of 1/54th of your pensionable pay.
• Re-Valuation – Your pension earned each year will be increased each year by a rate, known as ‘revaluation’, to account for inflation in the period before you retire or leave. In this Scheme the revaluation rate is inflation, currently the Consumer Price Index (CPI) plus 1.5% each year. The pension earned in a Scheme year (April to March) is re-valued on 1 April of the following and each subsequent Scheme year until you retire or leave.
• 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.
• 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.  It is important to remember that in the new scheme your pensionable pay is not based on your Whole Time Equivalent pay as in the old scheme, rather it is based upon your actual earnings after allowing for deductions such as salary sacrifice.  These deductions can have a significant impact upon your final pension.