Government to amend NHS Pension Scheme to boost recruitment and retention

Recent focus has been on pensions for doctors in terms of the Government’s radical plans to abolish the Lifetime Allowance in order to get greater numbers of doctors to remain in NHS employment and undertake additional duties. However, the Government has been steadily working on proposals that will encourage other NHS workers to remain in employment or return to work, which will start to take effect from April 2023.

In September 2022, the Government published Our plan for patients setting out a range of measures, including additional pension flexibilities, “to help the NHS and social care perform at their best for patients”.  Further details on the pension changes were provided in a consultation, to which a response has now been published. These measures include greater flexibilities for some NHS Pension Scheme (NHSPS) members in terms of the circumstances in which they may take their benefits and removing certain restrictions that prevent some members from accruing further benefits, if they continue working after drawing a pension.

The NHSPS is actually two schemes; comprising three benefit structures known as the 1995 Section, the 2008 Section and the 2015 Scheme. The 2015 Scheme is the one in which members are currently accruing benefits. Some of the flexibilities being brought in will remove barriers that prevent members continuing to build up benefits after taking their 1995 Section benefits. For example, it is not currently possible for members who take their 1995 Section benefits at the age of 60 to build up further benefits in the 2015 Scheme, if they return to work, and this has resulted in many such NHS staff contributing to NEST. From 1 April 2023, members will be allowed to build up benefits in the 2015 Scheme (subject to the usual membership conditions), if they return to work after taking their benefits from the 1995 Section.

There will also be easements on maximum service limits. From 1 October 2023, members of the 1995 Section or the 2008 Section who are currently non-pensionable because they have reached the maximum service limits set out in Regulations, will be able to join the 2015 Scheme (subject to an age 75 age limit and abatement, if applicable, until age 60).

Perhaps the greatest flexibility, from 1 October 2023, will be to allow 1995 Section members to partially retire by continuing to work and build up benefits in the 2015 Scheme, whilst claiming some or all of their benefits from the 1995 Section. There are, however, a number of limitations, most importantly that pensionable pay must normally reduce by at least 10% for a minimum of 12 months. There will be an element of flexibility in this though, in terms of making overtime non-pensionable. Some of the other existing restrictions will also continue to apply, particularly for staff who are entitled to take their full pension at 50.  

As an adviser on NHS pensions, we welcome the introduction of these flexibilities, as the current legislative restrictions in the way NHSPS members take their benefits do present a number of practical difficulties for NHS employers. We therefore anticipate that NHS employers will see a number of queries from staff or potentially returning staff who are interested in making use of the flexibilities.

Our content explained

Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

Posted by

Tags

Mills & Reeve Sites navigation
A tabbed collection of Mills & Reeve sites.
Sites
My Mills & Reeve navigation
Subscribe to, or manage your My Mills & Reeve account.
My M&R

Visitors

Register for My M&R to stay up-to-date with legal news and events, create brochures and bookmark pages.

Existing clients

Log in to your client extranet for free matter information, know-how and documents.

Staff

Mills & Reeve system for employees.