A trust's system to give all staff annual statements on their pension entitlements has been taken up nationally. Mike Colman and Paul Robinson report

Every member of the workforce is interested in knowing the value of their pension in order to plan for their future. Thanks to a pilot scheme involving King's Lynn and Wisbech Hospitals trust and the NHS Pensions Agency, the trust's 2,250 pension scheme members now receive an annual statement showing their estimated current scheme entitlements - including additional voluntary contributions - and all associated death benefits. Values are automatically projected ahead to age 60.

These staff can now plan for their retirement years using readily available information that is accurate and updated every year. The Pensions Agency has extended the pilot, and some 30 trusts in England and Wales are now using this fast-track route to delivering regular benefit statements.

Historically, the Pensions Agency kept members informed of their benefit values on an ad hoc basis, responding to individual enquiries. In the experience of the trust, despite local initiatives to advertise benefits of the scheme, very few members fully understood the benefits.

This meant that many members were often not sufficiently informed to make accurate decisions on retirement income early on in their career.

Against this background, the NHS Pensions Agency and the trust decided to work together in February 1999 to identify an approach which could be transferable to the whole of the NHS for informing members annually of the current values of their NHS pension benefits, and indicating their likely values at retirement age. With this knowledge, members could regularly review their likely retirement income, and take early action to buy additional benefits if necessary.

The agency and the trust agreed to investigate methods of providing this annual information service in the expectation that all schemes would be required at some point to produce pension statements routinely.

The intention was to identify a process that would be available throughout the NHS, as well as to standardise practice, contain costs and minimise the exposure arising from inaccurate ad hoc pension estimates.

The trust, supported by its software supplier Giltbyte, and the Pensions Agency, supported by its information systems supplier Capita, started on the pilot scheme with the aim of designing a process to extract historic membership data from agency computer systems, offering the data to members for checking and then converting it into a bulk issue of benefit estimates for all staff.

The project board, comprising the four parties, found only one previous NHS scheme on which to build the project - a small-scale pilot in which basic benefit statements had been produced manually. So the first step was to agree the information to be given to members and identify the routes by which this could be achieved.

Attention was paid to the disclosure of information acts and the standards achieved by comparable occupational pension schemes outside the NHS. It was agreed to keep the NHS community informed of progress via the quarterly national meetings of the NHS pensions scheme employers forum and NHS Pensions Agency newsletters.

Work on designing the annual statements continued from FebruaryMay 1999. The output of comparable external schemes ranged from a single sheet of A4 in some cases up to a dozen in others. In June 1999 a final draft was agreed, based on a single sheet of estimates accompanied by an additional sheet of explanatory notes containing selected personalised paragraphs. The current practice whereby NHS employers issue pension record updates to the agency at the end of every March was key in deciding that the statements would focus on the scheme membership and pensionable pay as at each 31 March.

Having identified the statement content, work surrounding file specifications for the download of data from the agency mainframe to the trust fileserver could be finalised and tested, and this proceeded through June and July.

The next phase was transferring the agency-held membership data into the trust's pensions database and issuing detailed membership statements to staff to check for accuracy.

Then, following any necessary updating of records by the agency, the staff-approved membership data was converted into pension and deathbenefit estimates, showing both current values and also projections ahead to age 60, using calculation and extrapolation matrices approved and controlled by the agency.

The reason for distributing membership records to staff was to seek comment on the validity of this core data, much of which had been held on the agency mainframe for 20 years or more. There was concern that this data-vet might reveal disagreements about the membership record, some of which could be due to the historic annual submission of manual records by NHS employers.

Records for some staff revealed more than 30 periods of employment with different NHS employers - thereby compounding the potential for discrepancies. The statements of membership were issued to staff in August 1999, with a reply slip for them to acknowledge either the accuracy of the record or to identify any disagreements and to offer correct details.

Staff feedback confirmed a high level of data accuracy at the agency for trust staff. Ten per cent of members at the trust raised queries and half of these resulted in trust or agency amendments to records.

The remaining 5 per cent were queries that proved the membership record was accurate - several instances relating to members forgetting refunds of pension contributions received many years earlier. This resulted straight away in those members considering buy-back of the refunded membership using the NHS scheme's half-cost added years facility.

Through September and October 1999, the replies from staff were sifted and queries were resolved by the trust and the agency working together.

Another download to the trust in late November contained data (as at 31 March) as verified by trust members. The conversion of this membership data into pension-related values could now safely begin.

The technical aspect of the benefit calculations was progressing in parallel with the membership data validation. The calculations were all to be performed on the trust file-server using Giltbyte software running under agency-approved protocols, dramatically reducing the risks to the trust from staff dependency on traditional ad hoc estimates.

After many rounds of testing, correction and final regression testing, the project was completed in January, enabling the agency to assume calculation and historical membership record risks, leaving the trust with responsibility for current membership and pensionable pay details only.

The trust issued the benefit statements to staff on 7 January 2000.

Feedback from staff organisations at the trust has shown great support for the process, which is now available for other NHS employers in England and Wales. The first wave of roll-out sites is already engaged with the agency at various stages of implementation, and these, and successive implementations, will benefit from the system pre-design.

Employers need an initial staffing resource of pension scheme expertise when embarking on the process, and the level of resource will depend on the validity of their pension scheme records.

Given records of good quality, two weeks of a staff member's time should be adequate to achieve the first-time issue of benefit statements, including data validation, installation of software, data transfers and other initial preparatory work.

The agency is working with the trust to pilot electronic access for members to pensions data. The trust and Giltbyte are also working locally to extend the benefit statement to include the automated local production of leaver statements to coincide with the issue of P45 forms, and the production of statements to non-members, indicating the projected costs and benefits of joining the scheme at the start of employment, and annually thereafter.

The way ahead promises exciting times, with ultimately all NHS employers and members able to obtain and use pensions data for active workforce and retirement planning.

Key points

A trust is now providing annual pension statements for 2,250 staff through a collaborative scheme with the NHS Pensions Agency.

The scheme involved the transfer of data from the Pensions Agency, some of which had been on the trust database for 20 years, and achieved a high degree of accuracy.

The scheme is now being rolled out at 30 other trusts.