What is the difference between NHS early retirement and flexible retirement?

When it comes to retiring from the NHS pension scheme there are a few options including flexible and early retirement. Discover what they are today to help you decide which is best for you.

Voluntary Contributions

Voluntary early retirement from the NHS is where you choose to retire, partially or fully, before your NHS pension scheme’s standard pension age but after the minimum pension age.

If you’re part of the 1995 scheme then you can access your benefits between the ages of 55 and 60, or if you were in the scheme on 5th April 2006 it’s between 50 and 60. If you were in the 2008 scheme before 4th November 2021 then your benefits are accessible between the ages of 55 and 65, with a protected minimum pension age of 55. If you’re in the 2015 scheme you can access your benefits between 55 and your state pension age.

From 6th April 2028 the minimum pension age will increase to 57 for those without a protected pension age.

If you’re considering voluntary NHS early retirement, your pension will be actuarially reduced to reflect that it is being paid before your normal pension age. Actuarial reduction means there will be an actuarial table used to calculate the reduction to your NHS pension if you take early retirement. This is calculated based on mortality rates and other data, which can change from time to time.

This early retirement reduction on your NHS pension is applied differently in some of the schemes. For the 2008 and 2015 schemes the actuarial reduction is applied to your pension before the commutation for the lump sum. If taken before the age of 60 for the 2008 section the lump sum is also subject to a reduction. For the 1995 section the reduction is applied separately to both your pension and lump sum.

In order to work out what kind of reduction you will be looking at for taking NHS early retirement, it’s best to discuss with one of our independent financial advisors to look at your individual case.

It is also worth noting that if you’re planning to retire early from your NHS pension, you must apply four months in advance of your intended retirement date, and you need a minimum 24 hour break between any further NHS employment to access your benefits on full retirement.

NHS flexible retirement explained

Quite simply, early retirement means retiring from the NHS before the scheme’s normal pension age. But flexible retirement looks a little bit different.

In October 2023 new flexibilities came into effect to allow NHS staff to retire flexibly. Current members of the NHS pension scheme were given the option to use their accrued pension benefits to achieve a better work-life balance. For example, they could work less hours, or take a lower paying role, and use their built-up pension to supplement their income.

There are a couple of options to take when considering NHS flexible retirement:

Retire and return – This allows those with pension scheme benefits in one of the legacy schemes to retire and bring their pension into payment, then return to NHS employment and continue to build up further pension benefits in the 2015 scheme.

Partial retirement (drawdown) – This allows members to draw down some, or all, of their pension and continue in NHS employment, when in agreement with their employers. Members must take from 20% to 100% of their pension benefits in one or two payments, without leaving employment.

Both of these options have been introduced and refined in order to help NHS employees and employers. By retiring flexibly, NHS employees can find their work-life balance and by doing so, improve their wellbeing while being financially secure. By choosing to do this you can find more time to do the things you really want to do, like spending time with loved ones or doing hobbies.

Flexible retirement also helps the NHS to retain valuable experienced staff, while they can retire gradually and pass their skills and knowledge to their colleagues. This helps with succession planning as well as ensuring quality care for patients.

Like with early retirement, there are potential pension reductions that are worth investigating before choosing NHS flexible retirement for yourself. These reductions rely on a set of variables, so it is best to discuss these with one of our financial advisors to look at your case personally to help you choose the best path for you.

Which is better, NHS early retirement or NHS flexible retirement?

This is an entirely personal question, specific to you. Both schemes come with benefits and reductions, so your best option is to get independent financial advice from the experts at Chase de Vere Medical to help you get a comprehensive overview of what these will mean for your financial future.

After a career focussed on providing care for other people, your retirement from the NHS is a time to take care of yourself and you deserve the best.

Book a complimentary consultation today.

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