The fall of the Tory party

Staff like managers and senior nurses in Agenda for Change pay band 8 got statements last year for the first time ever that indicated they were approaching the £40k limit particularly if you had years accrued in the pre-2015 final salary scheme.
That included me and a whole tier of management so if things hadn't changed the scale of the issue would have affected exponentially more non medical staff in coming years.

Presumably higher interest rates have mitigated the issue somewhat? The same £x annual income has a much lower cost to provide these days given where annuity rates have gone.

ETA: I didn't think the £40k annual limit had changed, just the LTA?

Turns out it was wrong. He removed the limit altogether. I seem to remember the limits were put in to stop severance deals putting stacks into pension pots and avoiding tax. Perhaps the £40k annual limit is designed to prevent this.

NHS pension is defined benefit so annuity rates don't impact.

The scheme still needs to come up with a value for the pension to assess whether it's approaching the LTA. One would expect the multiplier / discount rate used to have some correlation with gilt yields...

NHS employees going back years are mainly based on a final salary scheme.
Basically the pension is 1/80 of final salary for each year of service with max pension of 40/80 of final salary after 40 years service. So interest rates are not really an issue. Contributions are about 12-15% salary.

There are variations and currently on a career average. I have 40 years of service this December so pondering what to do.

Nope, it's the annual pension value you have generated to date multiplied by an expected average number of years in the future it will be paid.
So if your accrued pension now was £5k that was multiplied by 19 to give LTA value of £95k

See post above. Question is how you value the final salary entitlement (which is a longevity x discount rate x inflation question).

Doing a quick google it looks like a simple 20x multiple is used for LTA purposes (equivalent to a 5% annuity rate). Suspect this is a bit of a fudge and on an "economic" basis the entitlements were worth a lot more during the period of low interest rates

So if your accrued pension now was £5k that was multiplied by 19 to give LTA value of £95k

Just crossed posts. The 19x is just an annuity rate upside down - I think that number may have been higher in the past when rates were lower (I saw 20x somewhere when I quickly googled this). So a small benefit, not enough to radically change the equation.

The diffs schemes in play also have different valuations and you include the lump sum from the old scheme. The method for inflation adjustment to the LTA value was broken by the level of the spike in Oct 22 vs Oct 21 and they tweaked that just last month to sync the rates used. When CPI changed very little the flaw was pretty immaterial.

Sorry, I misread your post and thought the question was how my NHS pension was calculated.

On a practical point there are a load of doctors urgently cancelling the retirements originally planned to happen before Apr 6th

Yep, colleague just set about doing that. Increases his pension by about £300 a month he reckons by leaving after.....

Sounds like the policy worked then!

Most will definitely be going on the 7th but there will be some who made decisions based on what they knew at the time and it will genuinely change what that decision is now.

Some classic Tory playbook action going on. So, when does the new childcare free hours start, April like most budget stuff, No 2025. so just vote tory and look what you could get.

To be fair if most nurseys are like ours you'd need to give them 2 years notice if you wanted more hours

🇬🇧 2025 👍 British cheese and turnip pies for everyone* 👍 2025 🇬🇧
(*who entered the country via a legal route)

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FYI All - from sky news:

30 hours of free childcare for all children over nine months
As was widely expected, the chancellor now announces a big boost for childcare - but he goes further than had been trailed.

Jeremy Hunt confirms the government will provide 30 hours of free childcare for "every single child over the age of nine months" in eligible households where all adults are working at least 16 hours.

It had been expected to apply for children over the age of one, but "the offer will now start from the moment maternity or paternity leave ends", Mr Hunt says.

The package is worth on average £6,500 every year for a family with a two-year-old child using 35 hours of childcare every week and reduces their childcare costs by nearly 60%, the chancellor says.

"As it is such a large reform, we will introduce it in stages to ensure there is enough supply in the market.

"Working parents of two-year-olds will be able to access 15 hours of free care from April 2024, helping around half a million parents. From September 2024, the 15 hours will be extended to all children from nine months up, meaning a total of nearly one million parents will be eligible."

Mr Hunt also says he will bring in incentive payments of £600 for childminders.

This will rise to £1,200 for those who join through an agency.

"I've also heard many concerns about cost pressures facing the sector," he says.

"We know this is making it hard to hire staff and raising prices for parents, with around two-thirds of childcare providers increasing fees."

Mr Hunt says alongside that additional funding, the government will also change minimum staff-to-child ratios from one to four to two to five in England.

He goes on to say that for any parents who are moving into work or want to increase their hours, "we will pay the childcare costs upfront".

"We will increase the maximum they can claim to £951 for one child and £1,630 for two children, an increase of almost 50%," he says.

You omitted the pig semen-based accompanying condiment.

Not that it makes any difference to me but this looks like it may need a bit of a rethink

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There’s no good solution to these cliff edges. Start tapering the support at lower income levels and you create really high marginal tax rates. Have no cliff edge and you are giving £££ to mega earners.

For anyone caught by this isn’t the simple solution to chuck anything over £100k in your pension for a few years?

But what about your Evoque lease? Can't downsize when the kids still need a pram!

Seriously though - I think it's on taxable income, so while your pension is pre-tax it doesn't reduce your taxable income number. Ianaa.

I also assume this is why you get large salaries after a certain point. The take home on 150k vs 160k is not a lot after tax as a %.

Have no cliff edge and you are giving £££ to mega earners.

Just do that, make the marginal rate smoothly increasing, adjust the bands until it's all revenue neutral. Scrap NI too. Couple of day's work at most

The take home on 150k vs 160k is not a lot after tax as a %

The marginal rate up there is only about 47% as NI goes down to 2% and most of the income-contingent benefits are already gone. £5.3k is probably not nothing even if you were already on £150k.

Feels to me like there would be some kind of deadweight inefficiency introduced by taxing one group of rich people more to pay transfers to another group of rich people, but I sort of get the sentiment.

Don't underestimate how much people like hypothecated taxes though. The (incorrect) idea that NI is some sort of personal pot or insurance policy you fund allows the collection of more feathers with less clucking (as de Tocqueville almost said).