NHS swap scheme: how it works
As an example, NHS worker Peter retires after 20 years of service with an average salary of £25,000.
Under the pre-reform scheme, Peter would receive a pension of £6,250 (calculated as 1/80 x 20 x £25,000) plus a tax-free lump sum of £18,750 (3/80 x 20 x £25,000).
Under the new scheme, Peter would receive a pension of £9,259.25 (1/54 x 20 x £25,000) with no automatic lump sum.
Peter would be able to voluntarily commute pension for a lump sum at the rate of £12 of lump sum for £1 of pension.
This means he could receive the same lump sum in the pre-reform scheme (£18,750) if he gives up £1,562.50 of pension.
If he takes this option, his new pension is £7,696.75 (£9,259.25 - £1,562.50) and that is
still 23 per cent higher than his pension under the old scheme.