For those dedicated medical professionals that work tirelessly in the country’s health service, the NHS Pension Scheme is an attractive benefit. However, many remain unaware of the age at which they can retire.
For some doctors, retirement is something they do not want to contemplate. The thought of leaving a career to which they have devoted much of their lives can be daunting. For others, the end of such a demanding, challenging role and the likelihood of less stressful times ahead can be an occasion to celebrate.
Either way, it is important for healthcare professionals to plan carefully for a life after medicine and to fully understand the implications of their membership of the NHS Pension Scheme.
When can I collect my NHS Pension?
For medical professionals, when you can retire will depend on what section or which scheme you are in.
There are two different NHS Pension Schemes, one of which has two sections. The original scheme is split into the 1995 and the 2008 sections. A new and separate scheme was introduced on 1st April 2015, this is known as the 2015 Pension Scheme.
The 2008 Section and the 2015 Pension Scheme
Under the 2008 Section and the 2015 Pension Scheme, the minimum pension age – the earliest age at which you can draw your NHS pension – is 55.
But be warned.
Draw your NHS pension early and your retirement benefits will be reduced to reflect the fact that your pension will pay out for longer, with fewer contributions having been paid.
In fact, draw your pension at any age before your scheme’s normal pension age and you will face a reduction in your benefits.
For the 2008 Section, your retirement benefits will be reduced if you draw your NHS Pension before the age of 65.
For the 2015 Pension Scheme, your retirement benefits will be reduced if you draw your NHS Pension before your State Pension Age.
Under the 1995 Section, the earliest you can start to draw your NHS Pension is from the age of 50, provided that you joined the scheme before the 6th April 2006 and have not had a break of more than 5 years, otherwise, your minimum pension age will be 55.
Members who have deferred 1995 Section benefits for service after 31 March 2000 and re-joined the scheme as a 2008 member cannot apply to claim their benefits from either Section until they reach the age of 55.
Yet again, if you draw your NHS pension early your retirement benefits will be reduced. Expect a reduction if you draw your pension before the age of 60, unless you have Mental Health Officer (MHO) status, in which case, subject to certain conditions being met, you can draw your NHS pension without penalty from age 55 onwards.
Drawing your NHS Pension and retiring from the profession aren’t the same thing
Just because you’ve started drawing your NHS Pension, it doesn’t mean you have to give up work. For those medical professionals who may be reluctant to hang up their stethoscopes for good, in certain circumstances, the NHS Pension Scheme will allow employers and employees to be flexible about things such as:
- The age at which you retire.
- The length of time you take to retire.
- The nature and pattern of work in the lead up to your retirement.
Where your employer, or your GP partners are in agreement, you may be able to exercise Retire and Return. This will allow medical professionals to retire, claim their retirement benefits and then return to their usual NHS employment or self-employment. However, they will be required to adhere to the 24-Hour Retirement Rule.
What is the 24-Hour Retirement Rule?
The 24-Hour Retirement Rule means a medical professional must retire from his or her NHS contract for at least 24 hours.
Once again, the different sections of the NHS Pension Scheme bring different requirements:
- Members must exercise 24-hour retirement if they want to return to work regardless of which scheme they are part of.
- Under the 1995 section if you return to work you cannot then contribute to the 2015 Scheme
- Under the 2008 Section, medical professionals can contribute to the 2015 Scheme if they return to work.
There are other important factors in the 1995 Section following your 24-hour break. These include the requirement that you cannot be paid for more than 16 hours a week in the calendar month after you collect your pension. This takes into account any work which is deemed NHS pensionable employment. It should be pointed out that at the time of writing this condition has been suspended However the rules will be re-introduced with 6 months’ notice following the pandemic.
Members who have deferred pension benefits in the 1995 and/or 2008 Section(s) who have had a break of more than five years may claim their deferred benefits, reduced for early payment, once they reach their minimum pension age without having to take a 24 hour break in their NHS employment.
The greatest potential downside with 24-Hour Retirement is that you must resign from your job or partnership, and so you risk not being able to secure another NHS contract, in particular a substantive one. The risk is generally less for GPs as they simply need to agree a return to work plan with their partners. Single handed GPs, however, need to exercise greater caution.
Are there other flexible options?
Other flexible retirement options are available dependent on which section or scheme you are a member of. These include:
- Wind Down – medical professionals can prepare for retirement by remaining in their current post but reduce the number of hours or days they work. This is available in the 1995 and 2008 Sections and the 2015 Pension Scheme.
- Draw Down – where members can take part of their pension benefits and continue in NHS employment. This is available in the 2008 Section and 2015 Pension Scheme.
- Early Retirement Reduction Buy-Out (ERRBO) – in which medical professionals can pay additional contributions to buy-out the reduction applied to a pension if they retire before normal pension age. This is available in the 2015 Pension Scheme only.
How can Chase de Vere Medical help?
Because of the myriad of complex rules, when and how to draw your NHS Pension, or Pensions for those doctors with benefits in more than one section or scheme, can be a potential minefield and the need for well-informed decision making is crucial, particularly on decisions which could have repercussions for the 20 or more years that form your retirement.
Having a specialist NHS Pension adviser like Chase de Vere Medical on your side could prove invaluable.
You may be approaching retirement and looking to claim your NHS pension, or have only recently joined the NHS. Whatever your personal circumstances we can help you prepare for life after medicine – that could even be considering funding your own care in old age or passing on your legacy to loved ones.
Structuring your pensions, savings and other financial assets correctly will help to maximise your retirement income.
As truly independent and specialist financial advisers to the medical profession, Chase de Vere Medical has the expertise and experience to support you in reaching your personal and financial objectives during retirement. To ensure you take the right steps toward your retirement, speak to an independent adviser.
Content correct at time of writing and is intended for general information only and should not be construed as advice.