The Coronavirus Act 2020 introduced on 25 March contains NHS Pension Scheme measures which immediately allow recently retired NHS staff to return to NHS work or increase their working commitments without their pension benefits being affected.

These measures will provide valuable additional capacity to the NHS helping to ensure that the health care sector is able to meet the increased demands of the COVID-19 outbreak.

Background

The Coronavirus Act 2020 contains temporary measures that suspend the following scheme rules:

  • The 16-hour rule in the 1995 Section which currently prevents staff who return to work from working more than 16-hours per week in the first month following retirement.
  • Abatement for special class status members in the 1995 Section.
  • The requirement for staff in the 2008 Section and 2015 NHS Pension Scheme to reduce their pensionable pay by 10% if they elect to ‘draw down’ a portion of their benefits and continue working.

Temporary suspension of the 16-hour rule

This rule currently prevents members who return to work after retirement from the 1995 Section of the NHS Pension Scheme from working more than 16 hours per week in the first calendar month after retirement. Suspension of this rule also allows members to return immediately to work after taking a minimum 24-hour retirement and continue their existing working commitments, or increase them, whilst they are in receipt of their full pension benefits.

Temporary suspension of abatement for special class status holders in the 1995 Section

This will remove a barrier which stops special class nurses and mental health officers aged 55 to 60 years old, who have claimed their pension benefits, from returning to work without having their pension suspended or reduced based on their earnings The abatement rules also apply to people who have retired on ill health grounds or in the interests of the efficiency of the service (IES), along with a limited class of persons who have retired on redundancy grounds. These measures do not suspend the abatement rules that apply to these groups.

Temporary suspension of abatement in the 2008 Section and 2015 Scheme

This is where a person has elected to ‘draw down’ a portion of their benefits and subsequently wishes to increase their earnings or commitment to the NHS so that they are in excess of 90% of the level before draw down was taken.

Process

These provisions came into effect on 25 March 2020 upon commencement of the Act.

Following the end of the COVID-19 outbreak, a 6 month notice period will be given to staff and employers at the end of which the relevant sections of the pension scheme regulations will take effect again. Staff and employers will therefore have 6 months’ notice to readjust their working patterns.

Question and Answer

Question – When will these measures take effect

Under the Act, these measures will take immediate effect from 25 March 2020

Question – Will staff who retire and return qualify for death in service cover?

The NHS Pension Scheme provides death in service cover to active members who are yet to retire to support to a member’s partner and dependents should they die before claiming their benefits.

Preserved members also have death in service cover. Recently retired pensioner members have already had the benefit of a tax-free lump sum, so the death benefit is smaller.

Staff who die in service do not go on to draw their pension and lump sum, so the larger death benefit ensures that all members and their beneficiaries get a minimum fair value from their pension benefits.

However, the Scottish Government is developing firm proposals to offer a death in service package to those staff outside the NHS Pension Scheme. More information will become available in the next week.

Question – The impact of pension tax on high earning clinicians is a big issue and a barrier to extra capacity. What are you doing about it?

The Health Secretary Jeane Freeman wrote to the Chancellor on 30 January and 26 February urging him to fully resolve this issue at the UK budget. We are pleased the Chancellor has listened, and we welcome the action he has taken.

The Chancellor confirmed at Budget that both annual allowance taper thresholds will be increased by £90,000, removing anyone with income below £200,000. Based on income from their vital work for the NHS, the measure will take up to 98% of consultants out of the taper altogether. There is no change to the Lifetime Allowance, which will continue to rise annually by CPI.

The incentive to take on extra NHS work is now restored, and from 6 April doctors can earn at least an additional £90,000 before reaching the new taper threshold. These tax measures apply to everyone, including senior managers and clinicians within the NHS.