The Department of Health and Social Care (DHSC) is making changes to the NHS Pension Scheme rules to enable NHS staff to work more flexibly up to and beyond retirement age.
The 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 changes will 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 from 1 October 2023 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 from 1 October 2023 , 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 from 1 April 2023. 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 from 1 April 2023.
Permanently removing the 16-hour rule from the 1995 Section from 1 April 2023 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 1 April 2023, 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 and from 1 April 2023, it’ll also be an option for members who have retired with 1995 Section benefits.
Members who have 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, will also be able to join the 2015 Scheme. The age limit for 2015 Scheme membership (75 years) will still apply.
Why the changes are being made
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 is 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 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 permanently removing this rule from 1 April 2023. This will 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 removing the 16-hour rule, they’re also 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’).
After the 1 April 2023, 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 will 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.
If you've already retired with 1995 Section benefits and returned to work before 1 April 2023
If you’ve already retired and taken your 1995 Section benefits and then returned to NHS work, you will be able to join the 2015 Scheme and build up further pension from 1 April 2023.
Before the changes take effect on 1 April 2023, you'll have previously been unable to build up further benefits in the 2015 Scheme. As a result, you may have an alternative pension arrangement, for example, the National Employment Savings Trust (NEST), or you may not be contributing to a pension scheme.
If you’re newly eligible to join the 2015 Scheme on 1 April 2023, your employer will not be required to enrol you into the scheme. They must however notify all staff, who have taken their benefits from the 1995 Section and returned to work before 1 April 2023, that they are eligible to join the 2015 Scheme from 1 April 2023 if they wish.
If you're newly eligible to join the 2015 Scheme from 1 April 2023 and wish to take up the option, your employer must set up membership for you and may need to end any alternative pension arrangement you have.
If you choose to end your membership to an alternative pension arrangement, for example NEST, and join the 2015 Scheme, you may be able to transfer your benefits from the alternative pension arrangement into the 2015 Scheme. You have 12 months to transfer your benefits after becoming eligible to join the Scheme and must do so before your normal pension age.
You can find more information on our transferring into the scheme webpage.
Partial retirement
From 1 October 2023, the DHSC is introducing 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 from 1 October 2023, it will also include any 1995 Section benefits you have.
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%.
Why the changes are being made
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.
From 1 October 2023 the DHSC is 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 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 amending the rules governing partial retirement in the 1995 Section to be the same.
Read more about the suspension of abatement COVID-19 guidance on support for retired members.
The DHSC recently published the outcome of its consultation on the changes, which closed on 30 January 2023, NHS Pension Scheme changes to scheme regulations consultation response (Gov.UK).
To make sure members who are close to retirement age had a chance to consider the changes before finalising their retirement plans, the DHSC asked that we send letters to those closest to their normal retirement age from mid-January 2023, ahead of the consultation closing. This has now been completed.
We are currently sending letters to all remaining active members and will then be writing to deferred members. We expect to have sent all letters by the end of June 2023.
You can view a copy of the disclosure letter that is being sent to all members.
Now the consultation response has been issued we're updating this webpage. We'll be sharing more information before the end of March 2023 on the retire and return changes being introduced from 1 April 2023.
We're aiming to share updates and information on partial retirement by early summer ahead of implementation from 1 October 2023.
