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Your options for a flexible retirement

The Department of Health and Social Care (DHSC) is proposing making changes to the NHS Pension Scheme rules to enable NHS staff to work more flexibly up to and beyond retirement age.

The proposed changes include making it simpler to take partial retirement, meaning you can claim part of your pension and work in a more flexible way without having to leave your job.

The proposed changes would also enable members who have 1995 Section benefits to return to NHS employment after retirement if they wish and build up further pension benefits in the 2015 Scheme.

Summary of proposed changes

Introducing partial retirement options for members with 1995 Section benefits so they can claim (or drawdown) up to 100% of their 1995 Section benefits once they reach minimum pension age, whilst they continue to work and accrue further pension in the 2015 Scheme.

Expanding partial retirement options for members with 2008 Section and 2015 Scheme benefits, to increase the maximum amount of pension they can claim (or drawdown) from 80% to 100%.

Enabling retired members who have claimed their 1995 Section benefits to return to work in the NHS and build up new benefits in the 2015 Scheme. This option is already available to members with 2008 Section or 2015 Scheme benefits.

Allowing members who are currently non-pensionable because they have exceeded maximum service limits in the 1995 and 2008 Sections to join the 2015 Scheme.

Permanently removing the 16-hour rule from the 1995 Section to allow members to take their pension benefits, return to work and work as many hours as they choose, as long as they’ve had a break of at least 24 hours from their previous job.

Retire and return

From April 2023, under the proposed changes all members will have the option to retire and re-join the pension scheme.

If you  are not ready to stop work altogether, you can retire and take your full pension, then return to work after a break of at least 24 hours and re-join the 2015 NHS Pension Scheme to earn further benefits.

This is already available to members of the 2008 Section or 2015 Scheme. Once the changes take effect on 1 April 2023, it’ll also be an option for members who have retired with 1995 Section benefits.

Under the proposed changes, the DHSC is also intending to allow members with benefits in the 1995 and 2008 Sections, who are currently non-pensionable because they have exceeded maximum service limits and therefore had to stop contributing, to join the 2015 Scheme. The age limit for 2015 Scheme membership (75 years) will still apply.

Why the proposed changes have been suggested

Under the existing regulations of the NHS Pension Scheme, members who take their 1995 Section benefits are not allowed to return to the NHS Pension Scheme and build up further pension in the 2015 Scheme if they return to work. Because the 1995 Section does not have any late retirement factors, if members choose to leave these benefits unclaimed after the normal pension age, they do not increase in value.

Now all members have been moved to the 2015 Scheme for building up future pension benefits, these rules could cause problems for those who need to carry on working to be able to afford to retire but wish to claim their 1995 Section benefits when they are most valuable.

The DHSC has proposed changing the scheme rules to allow members who take their benefits in the 1995 Section to return to work and build further pension in the 2015 Scheme, if they wish.

This may help some retired staff to bridge the gap between claiming their NHS pension benefits and receiving their State Pension while supporting NHS capacity.

Removal of the 16-hour rule

Under the proposed changes, if you decide to re-join the NHS, you’ll be able to work as many hours as you choose straightaway.

Currently, the 1995 Section rules limit members to working 16 hours a week in the first month after retirement to avoid their pension payments being affected. The 16-hour rule has been suspended since 25 March 2020 and this suspension is due to continue to 31 March 2023.

The DHSC is proposing permanently removing this rule from 1 April 2023. This would mean that, as long as you’ve had a break of 24 hours from your previous job, you’ll be able to move to a new employment contract and start building 2015 benefits immediately.

Where members have more than one employment, they can remain working in the NHS and still be entitled to claim their pension, provided they do not work for more than 16 hours per week. This is the same number of hours members can currently work for their first month back after retirement without impacting their pension.

As the DHSC is proposing removing the 16-hour rule, they’re also proposing changing the 1995 Section regulations to remove the 16-hour rule for members with more than one employment. Members with more than one employment will need to take a 24 hour break from all employments to be able to claim their pension.

Suspension of abatement

If you’re a Special Class or Mental Health Officer member and take your pension, but return to work before you reach age 60, abatement rules currently apply to you. This means that if your post-retirement pay plus pension is more than your pre-retirement earnings, then your pension payments may be reduced (or ‘abated’).

Under the proposals, members with Special Class or Mental Health Officer status will still be subject to abatement until age 60 under normal circumstances. However, abatement is currently suspended until 31 March 2025.

This means Special Class or Mental Health Officer members would be able to return to NHS employment or increase their working commitments without having their pension payments reduced whilst abatement remains suspended.

Read more about the suspension of abatement COVID-19 guidance on support for retired members.

Partial retirement

The consultation also proposes changes to make it simpler to take partial retirement, meaning you can claim your pension and work in a more flexible way without having to leave your job.

Taking part of your pension benefits is also sometimes known as ‘draw down’.

This is already possible for pension benefits you’ve earned in the 2008 Section or 2015 Scheme. Once the proposed changes take effect, which is expected to be from 1 October 2023, it will also include any 1995 Section benefits you have. 

Under the proposed changes, from age 55 you’ll be able to take between 20% and 100% of all your pension benefits in one or two drawdown payments, without having to leave your current job.

Members of the 1995 Section who have a protected minimum pension age of 50 will also be able to claim pension benefits without leaving their job. To do this between the ages of 50 and 55, you’ll need to take 100% of your pension benefits. From age 55, you’ll be able take between 20% and 100% of your benefits in one or two payments, without having to leave work.

You’ll be able to continue building your pension in the 2015 Scheme. You won’t need to take a break or change jobs. You can carry on working if you want. You just need to reduce your pensionable pay by 10%. GPs, non-GP providers, and dental practitioners need to reduce their NHS commitments by 10%.

The DHSC will confirm timings for the availability of partial retirement in the consultation outcome, but it is expected this will be from 1 October 2023. 

Why the proposed changes have been suggested

Under the current 1995 Regulations, members are currently unable to partially retire, or to take some of their pension benefits whilst continuing to work and build further pension.

The DHSC is suggesting changing the 1995 Section regulations to allow members to partially retire and claim up to 100% of their 1995 Section benefits whilst continuing to work and build up further pension in the 2015 Scheme.

Under the current 2008 Section and 2015 Scheme regulations, members can only claim a maximum of 80% of their benefits.

To make sure the rules for partial retirement are the same for all members, the DHSC is also suggesting changing the 2008 Section and 2015 Scheme regulations to allow up to 100% drawdown, instead of a maximum of 80%.

Increased availability of partial retirement may better support members’ work/life balance and help retain valued experienced staff in the workforce. Members affected by pension tax may also consider partially retiring and remaining in work, rather than opting out of the NHS Pension Scheme or leaving the NHS completely. 

Suspension of abatement

Under the rules for the 2008 Section and 2015 Scheme, members who choose to partially retire (reducing their pensionable pay by at least the required 10%) but whose terms of employment change again within 12 months so that their pensionable pay increases to more than 90% of what it was before they took partial retirement, will be subject to abatement or a reduction of their pension benefits.

Drawdown abatement for members of the 2008 Section and 2015 Scheme is currently suspended until 31 March 2023 through the retire and return easements and will resume on 1 April 2023.

For consistency with the 2008 Section and 2015 Scheme regulations, the DHSC is proposing that the rules governing partial retirement in the 1995 Section will be the same.

Read more about the suspension of abatement COVID-19 guidance on support for retired members.

When the changes will be confirmed

The DHSC is consulting on the changes.

You can read more about the consultation and submit your views on GOV.UK.

After the consultation closes on 30 January 2023, the DHSC will publish the outcome of the consultation and we’ll update this webpage as more information becomes available.

We’ll write to all members to let them know about the proposed changes.

To make sure members who are close to retirement age have a chance to consider these proposed changes before finalising their retirement plans, the DHSC has asked that we start sending letters to those closest to their normal retirement age from mid-January 2023, ahead of the consultation closing.