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Payment of pensions after opting out of the NHS Pension Scheme

When a member opts out of the pension scheme (either exit code 16) and carries on working in a non-pensionable capacity, we need to ensure that the correct payable date is used when the member applies for their pension.

Deferred members must submit form AW8P and give details of their last day of non-pensionable employment at part 6 of the form. If the member was over their Normal Pension Age at their last day of service and opted out less than 5 years ago, then this date will need to be confirmed by the relevant employer before the award can be paid. Once the date has been confirmed the retirement application will be processed using the payable date of the day after the non-pensionable NHS employment ceases.

Additional checks are required if a member opted out more than 5 years ago and is now wishing to claim their pension. When a member of the 1995 Section opts out of or leaves the Scheme (when they are under their Normal Pension Age) for a period of 5 years or more and then reaches age 60 after 1 April 2008, they can have their pension benefits paid from their 60th birthday without first having to take a 24-hour break in membership.

Where the period between opting out or ceasing NHS Scheme membership and then reaching age 60 is less than 5 years, benefits cannot be paid before the first of the following two options occur;

  • the end of the 5 year period, or
  • they retire by taking a 24 hour break in NHS employment

Where the opt out period is less than 5 years the member must not work more than 16 hours a week for the first calendar month following their 24-hour break. If the opt out period is 5 years or more, the member is not restricted in the hours they can work and pension benefits will be unaffected.