If you’re considering leaving the NHS, make sure you understand your pension rights and entitlements
Doctors leave the NHS for all sorts of reasons but there is no doubt that the Covid-19 pandemic has added to the levels of stress, both mental and physical, in the profession. That may increase the number of doctors deciding to leave, either permanently or for a career break; in which case, it is crucial that doctors understand where they stand on pensions.
The position will vary according to your circumstances and intentions. First of all, if you have been a member of the 2015 NHS Pension Scheme for less than two years, you can apply for a refund of the contributions you have made if you leave, but you won’t retain any entitlement to pension. However if you leave the Scheme within 2 years and then re-join the 2015 Scheme within 5 years of leaving you are able to re-start contributions therefore avoiding a refund of contributions. Members of more than two years’ standing, however, cannot claim a refund.
Leaving on a career break
Doctors leaving the NHS for a short-term period – a career break of six months to two years, say – have the option of remaining in the NHS Pension Scheme. For the first six months of their time out, they simply have to keep paying their normal contributions, with the NHS making its usual employer contributions; for the subsequent 18 months, such doctors are responsible for both their own contributions and the payments that the NHS would normally make.
Leaving for good
Doctors leaving the NHS altogether have several options. The first is simply to leave the savings where they are, in the form of a deferred pension (this may be particularly useful if you intend to return to the NHS in the future). Alternatively, you are entitled to transfer your savings to a new pension scheme – but only if it is also a defined benefit pension scheme and you make the transfer within set time limits. Or, if you’re moving overseas, you may be able to move your pension savings into a “qualifying recognised overseas pension scheme” (often abbreviated to a QROPS).
Rejoining the NHS
Doctors returning to the NHS will find themselves in different positions. If you have been away for five years or more, your previous benefits will remain in the form of a deferred pension and you will join the 2015 section as a new member. You will also be given a one-off opportunity to transfer your deferred benefits into your new pension pot.
If you rejoin the NHS Pension Scheme after a break of less than five years, you may be able to rejoin the section of the scheme you previously belonged to (in the case of the 1995 section, you must be under its normal pension age of 60). This will be the case if you were a protected member of the 1995 or 2008 sections – that is, that you were allowed to stay in these sections when the NHS introduced the 2015 section of its pension scheme in March 2015.
Non-protected members of the 1995 and 2008 sections who rejoin within five years only get to resume membership of these sections if they have not yet passed their transition date – the date on which they were or are due to join the 2015 section under the reforms of five years ago. Otherwise, you will join the 2015 scheme.
The only caveat here is that the government is currently undertaking a review of public sector pensions and it is possible there will be a change in the rules around protected membership. For now, however, the principle is that only protected members and non-protected members yet to pass their transition dates can automatically rejoin the section of the NHS Pension Scheme they left when returning to work – and only if they return within five years of leaving.
Managing pensions as a locum
Finally, some doctors may choose to work as locums after leaving their current jobs. If so, you will be able to continue your membership of the NHS Pension Scheme. There are some administrative hurdles to get used to when contributing to the scheme as a locum, but the effort if worth it given the benefits and protections it offers. Bear in mind, however, that doctors employed through agencies or charging for their locum work through limited companies do not have this option.
The bottom line is that thinking through your pension planning should be a priority if you plan on leaving the NHS. And do not overlook the protections the scheme offers such as death-in-service benefits and enhanced ill-health retirement benefits. In practice, it will make sense to take professional and independent financial advice on how to put yourself in the best position.
Content correct at time of writing and is intended for general information only and should not be construed as advice.