Recent changes to the NHS Pension Scheme mean that from 1 April 2023 retired members with benefits in the 1995 scheme will have the option to return to work (after a break of at least 24 hours) and be able to re-join the 2015 NHS Pension Scheme. Previously, this was not the case and members with benefits in the 1995 scheme were barred from returning and building up any further pension benefits. Members with benefits in the 2008 and 2015 sections could already do this.
There are some limitations to those who can retire and return; including that members over 75 will not be able to re-join the scheme. Similarly, there are specific limitations to members wishing to re-join following ill-health retirement. One of those limitations is that, members who have taken their benefits as a serious ill-health lump sum, will not be eligible to re-join.
Members who wish to retire at the normal retirement age, who take voluntary early retirement, or whose benefits have been deferred, must take a 24-hour break in their employment in order to be able to access their NHS Pension (often employers extend this break period depending on the terms of the member’s contract). The member will need to terminate their contract of employment and then they will then be able to move to their new contract of employment following compliance with the 24-hour rule. However, there are some instances where there is no requirement to have a 24-hour break where any of the below situations apply;
- Members with no final salary link in the 1995/2008 Scheme and the 2015 Scheme, can continue contributing to the 2015 Scheme after claiming benefits from the 1995/2008 Scheme and do not need to take a 24-hour break
- Members who have deferred pension benefits in the 1995 and/or 2008 scheme(s) who have had a five-year break or more (loss of final salary link) may claim their deferred benefits on a reduced basis once they reach their minimum pension age or on an unreduced basis once they reach their normal pension age for the 1995 or 2008 Scheme without the requirement of a 24-hour break.
- The member is aged 55 or over and claiming redundancy pension benefits from one post only.
- The member has partially retired through draw down.
- The member has reached the maximum pensionable age of 75 (for 1995 Section members, age 70 before 1 April 2008).
As can be seen from the above, there is not a blanket exception to the 24-hour rule. However, these changes certainly ease the requirement for lots of categories of member. Separately, there is also a specific provision in relation to members with concurrent part time posts; in this situation a 24-hour break must be taken from all positions.
Further changes introduced also include the removal of maximum service limits for those in the 1995 and 2008 sections, along with the removal of the 16 hour rule for re-joiners. The removal of the 16-hour rule means that members (of the 1995 Section) who decide to return to work following retirement, may work as many hours as they like, immediately on re-joining, without the need to reduce their hours to 16 hours a week in the first month after retirement. This requirement was previously in place to eliminate any risk of pension benefits being affected. However, members can now work as many hours as they choose, straight away, without fear of their pension payments being stopped or reduced.
Further changes in relation to partial retirement are also due to come into force in October 2023. Partial retirement is already available to benefits earned in the 2008 and 2015 Scheme, however, from 1 October 2023 this will extend to benefits in the 1995 Scheme.
The changes will mean that members will be able to do the following without leaving their employment:
- Members aged 55 will be able to take between 20% and 100% of their pension benefits.
- Members of the 1995 Section who have a protected minimum pension age of 50 will be able to claim their pension benefits. To be able to do this they will need to take 100% of their pension benefits between the ages of 50 and 55. Then from age 55, they will be able to take between 20% and 100% of their benefits.
However, members will need to reduce their pensionable pay by 10% for the first 12 months after the member takes partial retirement. The reason for this is to protect against any reduction in pension benefits or abatement. This would need to be achieved through ordinary processes of discussion with their employer and perhaps flexible working requests as a route to reduction of duties.
The guidance on the changes to partial retirement has not yet been published and further clarity is expected in the coming months.
This article was co-written by Sadie Goodrum, Trainee Solicitor.