Leaving the scheme

Auto enrolment

All employees, eligible to join the NHS must be automatically included in the NHSSS(S) from the first day of employment. Eligible employees will no longer be allowed to opt out of the NHSSS(S) before they take up their employment. They must be enrolled in the first instance.

Following enrolment, if an employee wishes to opt out of the scheme, they can do so by completing an opt out form.

There are two types of opting out of the scheme –

1. opting out (within the 3 month opt out period)
2. ceasing active membership (members opting out after the opt out period, leaving the scheme in that contract or leaving the scheme or leaving NHS employment)

It has been agreed, that opt out period of one month in the scheme regulations in which employees are treated as never having joined, will be extended to three months. This will allow NHS employers more time to deal with those employees who wish to opt out of the scheme and enable them to make refunds of contributions locally, rather than the member having to contact SPPA directly to apply for their refund of employee contributions.

Please do not send copies of opt out forms for members who opt out within the three month opt out period. SPPA do not need to see these.

However, under auto enrolment regulations, employers must keep a copy of the opt out notice (original format) for four years.

The opt out form can be used for either situation and should be completed and signed by the employee. This should be forwarded to their HR/Payroll department who will take the necessary action to record the opt out and to stop the deduction of superannuation contributions.

Additionally, an opt out form will be required when an employee leaves a contract or leaves the scheme in its entirety but remains employed by the NHS in that contract.

Employees who have more than one employer, should complete an opt out form for each employment they wish to opt out of.

The new opt out form has comprehensive guidance attached and we have updated relevant guides, factsheets and web based information to take account of the changes under AE.

Please see process map which details the different steps to take when dealing with opting out under the new AE procedures.

The implementation of AE has also meant that information required by SPPA as the scheme administrator has changed:

• a starter (NSR01) will be required for all employees automatically enrolled per each contract, who remain in the scheme for 3 months or more
• a leaver (NSR02) will be required for all employees who leave a contract, leave the scheme in its entirety or opts out

Detailed information regarding employer's responsibilities under AE can be found on the Pension Regulator or DWP websites.

When a member leaves the scheme before becoming entitled to payment of benefits, there are several options open to them, depending on the reason for leaving and the amount of membership they have accumulated.

Options may include:-

• opting out but remaining in NHS employment.
• a transfer of pension rights to another scheme or other UK NHS schemes.
• preservation of pension rights.
• a refund of employee contributions

Employers are advised that they have a legal responsibility to ensure that all leavers are aware of the options open to them and the possible consequences of leaving the scheme.

There are time limits for some of the options for members who leave, particularly when arranging a transfer of pension rights. You can find out more here.

Employees who opt out of the scheme

All employees, eligible to join the NHS must be automatically included in the NHSSS(S) from the first day of employment. Eligible employees will no longer be allowed to opt out of the NHSSS(S) before they take up their employment. They must be enrolled in the first instance.

Following enrolment, if an employee wishes to opt out of the scheme, they can do so by completing an opt out form.

There are two types of opting out of the scheme:

• opting out (within the opt out period)
• ceasing active membership (members opting out after the opt out period, leaving the scheme in that contract or leaving the scheme or leaving NHS employment)

The opt out form can be used for either situation and should be completed and signed by the employee. This should be forwarded to their HR/Payroll department who will take the necessary action to record the opt out and to stop the deduction of superannuation contributions.

Employers should ensure that employees considering opting out are in possession of sufficient information to make an informed decision either on their own, or with the help of an Independent Financial Adviser (IFA)

Options - Within 12 months of leaving scheme

Where a member leaves the scheme with less than 2 years service including qualifying service, they will normally cease to be members of the scheme and have the following options available:

• transfer to another provision
• refund of contributions

Options – following more than 12 months break

Where a member leaves the scheme with less than 2 years service including qualifying service, they are only entitled to a refund of contributions.

Authorised periods of absence

An authorised period of absence (for reasons other than illness or injury) is usually referred to as a career break. It is used to allow employees to take a long term break from their employment to undertake further education or fulfil domestic commitments. It is not given to allow the member to undertake alternative employment.

A period of authorised leave can also be used to allow staff periods of employment in VSO or for mobilisation with the armed forces. Members who elect to take this option will be regarded as current members of the scheme for benefit purposes including death benefits.

Although a career break shall not be regarded as a break in service for NHS continuous service purposes, the break will not itself count as reckonable service for benefit purposes.

It should be noted, however, that under the scheme rules death lump sum payments are based on the best last 365 days actual pensionable pay in the 3 years prior to death. Members may wish to bear this in mind when agreeing a period for a career break.

NHS Scotland Reserve Forces Training and Mobilisation

The Scottish Government Chief Executive Letter CEL 2009 42 set out the general policy for NHS staff who are members of the Reserve Forces. These are staff who may be subject to call up and mobilisation in areas of conflict and also require regular time off for training to maintain their skills and readiness for deployment.

A Reservist who is called out is entitled to remain a member of the NHS Pension Scheme. The Ministry of Defence (MOD) will pay the employer's pension contributions whilst the individual is mobilised provided they continue to pay their individual contributions. Where mobilisation occurs the employee should be given special unpaid leave of absence. The employee's pension contributions would be calculated and held over until the employee returns. These would then be recovered monthly from salary and over the same period as the employee was absent. The employer will continue, on request of the employee, to pay employer's contributions to the NHS Pension Scheme for the period of mobilisation and invoice the MOD to recover this amount.

Although arrangements for collection of contributions from the member are to be collected from salary on return from mobilisation, when employers submit their annual return to SPPA they should be careful to ensure that the information is correctly recorded as showing contributions allocated to the relevant scheme year on which the payments were due.

Voluntary Services Overseas

Organisations such as the Voluntary Services Overseas (VSO) and British Red Cross hold a Direction under Section 7(2) of the Superannuation (Miscellaneous Provisions) Act 1967. Therefore, any member going to work abroad with these organisations may apply to remain in the NHSSS(S).

SPPA will also consider continued NHSSS(S) membership for any overseas employments in developing or war torn countries.

From time to time there may be other UK or Scottish Government initiatives to encourage workers to lend their skills to developing countries for limited periods. These schemes may provide remuneration to cover pension payments in different ways and therefore a direction may not be required in these circumstances. Further information on any such schemes can be obtained by contacting the Policy Branch of SPPA.

Application for continued scheme membership

Voluntary Services Overseas (VSO) will apply to scheme membership on the member's behalf. British Red Cross will ask their employees to complete form SB115.

Any members who are going to work abroad for any other overseas employer will have to make their own application to remain in the NHSSS(S).

This can be done by sending a letter of application and a copy of the contract of employment to SPPA.

Payment of contributions

Members employed by the British Red Cross will have their contributions deducted from their salaries in the usual way. Members employed by VSO do not receive a salary and VSO will pay both the employee and employer contributions based on the member's voluntary allowance. Any additional service contracts in force will also be paid by VSO

Most other overseas workers will have to pay both the employee and employer contributions based on the salary they were earning when they left the NHS. Section 7(2) Direction employers are advised to inform employees of this.

SPPA will calculate the amounts owing quarterly and the member may pay their contributions by cheque or standing order.

Authorised breaks

The NHS scheme provides for members of both the 1995 and 2008 sections (excluding locum practitioners) who are on an authorised break(including a career break), to choose to continue to pay contributions towards membership for a limited period. This is provided that their contract of employment is retained.

From 1 April 2013, members who choose to continue to pay contributions to the scheme can do so for a period of six months. During this period, contributions also remain payable by the employer. The member can choose to extend the period for a further 18 months. However, if this option is taken, the member would be responsible for payment of both employee and employer contributions.

Please note that contributions must be paid for the first six months to allow the member the option to extend for a further 18 months if required.

Submission of contributions

Contributions should be submitted by employers in the same way each month as for all other active members. These should not be paid as arrears on return to work. The employer should make arrangements with the member before the leave begins, to collect the contributions due and pay
promptly to SPPA. It is not compulsory for a member to continue to pay contributions during an authorised break. If a member chooses not to continue with their membership of the scheme, employers must submit leaver information to SPPA in the normal way.

Added Years Purchase

Contributions for any existing added years should continue to be deducted on all contracts where the break is less than 1 year. In cases where the break is more than 1 year contributions will be collected on the 10 days paid employment and proportionate credit will be given.

Leaving NHS

Members under the relevant scheme section age limit who leave NHS employment with less than 2 years service, including qualifying service, in the scheme, without entitlement to benefits may apply for a refund of their superannuation contributions using the refund form.

Opting out of scheme

From 6 April 1988 members can also apply for a refund if they opt out of the scheme - the employment does not have to terminate in these circumstances.

Deductions

Members should be advised that a refund of contributions will be subject to certain deductions eg: tax and Contributions Equivalent Payment (CEP) and before requesting a refund they should consider the full implications of taking a refund.

Options

It is particularly important before requesting a refund that members consider their options if they intend to:

• return to superannuable employment in the NHS
• take up an employment in which they may be subject to a Direction and become superannuable under the NHS scheme
• take up approved employment or an approved course of study
• take up other employment where they will be subject to a scheme to which their pension rights may be transferred
• take out a personal pension
• leave employment under a retainer scheme.

Members who wish further advice on these options should be advised to contact us.

Effects of Taking a Refund

Scheme benefits cover following a refund

Taking an immediate refund of contributions on leaving the NHS or opting out of the scheme will result in members losing the subsequent 12 months period of cover provided by the scheme e.g. a death gratuity and children's allowances.

Re-employment - time limit for repayment

Members who take a refund of contributions and within 12 months rejoin the scheme and wish their previous service to reckon, or enter an employment which they wish 'approved' in order to avoid a disqualifying break, must repay the net amount of the refund (ie the amount received by the member) within 6 months of taking up their new employment.

Rejoining scheme within one month

When a member applies for a refund of contributions and then rejoins the scheme after a break not exceeding one month, the previous service will be taken as qualifying service for the purposes of determining an entitlement to any subsequent refund, or an entitlement to benefits including preserved benefits.

Qualifying for a refund

Entitlement to a refund will arise when members under normal pension age leave NHS employment or opt out of the scheme and their service including qualifying service is less than 2 years.

A refund may be claimed:

• on leaving NHS employment, provided that any paid leave due does not extend the service to 2 years or over.
• on opting out of the scheme but continuing in NHS employment.
• when the member's service in the scheme is no longer reckonable following a disqualifying break of 12 months if the member held less than 2 years qualifying service.
• on leaving NHS employment under a retainer scheme (relevant to Practitioners only).

Non entitlement

A refund cannot be claimed when a member: ­

• has 2 or more years service including qualifying service
• is entitled to immediate payment of benefits from the scheme
• is in concurrent superannuable NHS employment and has left one employment but not the other
• has re-entered superannuable NHS employment and either did not have a break between termination and recommencement, or had a break of less than 12 months but did not apply for a refund during the break
• is on leave of absence either paid or unpaid.

Deductions

Income Tax

Income tax will be deducted from a refund of superannuation contributions at a current rate. The deduction is made to cover the tax relief which the member received during employment when contributions were deducted from earnings. The tax deduction is not recoverable.

Contributions Equivalent Premium

A Contributions Equivalent Premium (CEP), representing the additional National Insurance contributions payable to the State scheme in respect of employees whose superannuation scheme has not been contracted out, must be paid for those members who leave or opt out of the scheme and receive a refund of superannuation contributions for contracted-out NHS employment, for service pre 5 April 2016.

Contributions Equivalent Premiums - State Pension

The CEP which is paid to the National Insurance Contributions Office (NICO) by SPPA, secures an additional element to the former member's State pension and is paid by the State scheme in respect of the contracted-out employment after 5 April 1978.

The employee's share of the CEP is recovered from the member's refund of contributions; the balance is met by the scheme.

Application

Opting out of Scheme

The introduction of Auto Enrolment legislation means there are now different ways in which a member can opt out of the scheme and depending on which is applicable, will affect how and when a refund of contributions is made.

Opting out within the opt out period

When a member opts out within the opt out period, this is referred to as 'Opting Out'. Members are treated as having never been a member of the scheme, which means we hold no liability. In these circumstances, the employer will refund all the contributions directly to the member and we will store the opt out form on our system for future reference. If a member has already qualified for pension benefits, with previous service accrued, this will not be taken into account when their employer makes the refund. This is because they are treated as having never been a member, with only the employment/contract they are opting out of.

Opting out, out-with the opt out period – ceasing active membership

If a member is out-with the initial opt out period, but does not wish to remain in the scheme they can still chose to opt out. However, this is now referred to as 'ceasing active membership' and in these cases, we hold the liability i.e. refund/transfer/pension . The options available to the member after ceasing active membership will depend on how much service they have previously accrued in the scheme.

Leaving NHS

When a member leaves NHS employment, an application for a refund of contributions can be applied for using the refund form.

Leaver details should be submitted by the employer as quickly as possible to allow the refund to be processed.

Application for refund of contributions in respect of a deceased member – within 12 months of leaving scheme

If a member dies within 12 months of leaving the scheme and with less than 2 years service a death gratuity is paid. SPPA is still required to pay CEP and Tax to HMRC unless the member was married at the date of death.

If a member dies in service with less than 2 years calendar service they will qualify for a lump sum death benefit. If they were married, the spouse is entitled to a short term pension for three months and if the member had dependent children the short term pension would be payable for 6 months.

CEP and tax should also be paid to HMRC on these occasions. NICO should be informed the member has died.

Application for refund of contributions in respect of a deceased member – more than 12 months after leaving scheme

If a member dies more than 12 months after leaving the scheme without entitlement to preserved pension rights a refund of contributions will be payable to the legal personal representatives.

The legal personal representative should enter details on the refund form and forward it together with the death certificate to SPPA.

Former members living abroad

It will be possible to pay refunds directly to former members living abroad. However, if members consider that they will be unable to cash the payable order, they can forward the name and address and account number of a bank in this country to which payment can be made or nominate a person in this country to receive the payment.

This information should be sent direct to SPPA as soon as possible.

Refunds on arrears of pay

Refunds of contributions, where this is applicable, will be made by SPPA on receipt of any retrospective adjustment for arrears of pay. Payment will be issued to the address given on the application form REF unless SPPA is otherwise notified.

In the case of arrears of pay due to a former member and being paid more than 6 weeks after the employment has ceased the employer should deduct National Insurance contributions at the contracted-in rate for service up to 5 April 2016, due to contracting out ending on this date.

Revised figures from the employer for contracted-out earnings will therefore not be necessary if the retrospective payment of arrears is made 6 weeks or more after termination.

Repaying refunded contributions

Members who have received a refund of contributions following termination of employment or opting out of the scheme and re-join within 12 months can either:

rejoin the scheme as a new member

or

join another NHS scheme in England or Wales, Northern Ireland or the Isle of Man as a new member

or

repay the refunded contributions within 6 months of re-entry if they wish their previous service to become reckonable again.

The amount to be repaid will be the net amount of the refund (the sum the member actually received).

Any sum repaid under this arrangement does not, however, attract tax relief. Members who rejoin the scheme and wish to repay refunded contributions should inform SPPA on receipt of the letter which is issued when they re-commence employment.

Preservation action is the same for all sections of the scheme. However, please remember that NPA is – 60 for members of the 1995 section; 65 for members of the 2008 section and State Pension Age for members of the 2015 scheme.

Minimum Pension Age refers to the earliest age a member can retire from the scheme.

Members who leave NHS employment or opt out of the scheme before becoming entitled to receive their retirement benefits and who have 2 or more years' service including qualifying service will be eligible to preserve these benefits for payment at NPA, or earlier if they become permanently incapable of further employment due to health reasons.

Compulsory preservation will apply only after a 12 month disqualifying break from the scheme.

Preservation of pre 6 April 1988 service

Preservation also applies to members who have opted to transfer their pension rights to an approved Personal Pension scheme but who have had to retain pre 6 April 1988 reckonable service in the NHS scheme.

Members with less than 2 years service

Members who have less than the 2 years service and leave the scheme cannot preserve their pension rights following the disqualifying break of 12 months.

Members can however safeguard their pension rights by not incurring a disqualifying break if termination of service is due to illness or injury.

Members leaving the scheme

When a member leaves the scheme the employer should submit the leaver form NSR02 with particular reference to Item 10.

The entry in Item 10 should be the balance of the earnings from that part of the previous financial year which when added to the earnings in the final part year will provide a total earnings for the last 365 days service.

This information is essential for subsequent preservation action and ultimate calculation of benefits when the member reaches age 60.

Preservation letter

SPPA write to members confirming that their benefits have been preserved approximately 12 months after they have either opted out of the scheme or terminated employment, provided the member has not re-entered superannuable NHS employment during the 12 months break or become entitled to payment of the preserved benefits.

The value of the preserved benefits at date of leaving will be stated in the individual's letter, with the member being asked to inform SPPA of any relevant or subsequent changes in personal circumstances eg: change of address.

When a member's benefits are due to be preserved SPPA will request from the employer details of the superannuable remuneration if this is not already held by SPPA.

No further action is required by the employer.

Further membership

Members who leave the scheme with preserved rights may rejoin the scheme at any time prior to NPA. Members can rejoin anytime before age 75 in the 2015 scheme, 2008 section and also in the 1995 section, unless the member is over age 70 on 31 March 2008 or a has special class status and is over age 65. When the member eventually retires SPPA calculate whether it is beneficial to pay a separate or a combined pension in respect of the members of pensionable employment.

Preserved Benefits are payable:

• from normal pension age (60, 65 or SPA)
• NHS employees who have benefits preserved after opting out of the scheme provided they have left NHS employment
• following application and approval for early payment on ill health grounds
• on application for early payment with actuarially reduced benefits. This is only applicable to members who are aged 55 (unless the member retains a protected pension age - need to check with SPPA) or over, leaving the scheme with preserved rights on or after 6 April 2010.

Transfer of preserved benefits (Transfer section)

Members may be able to transfer preserved benefits to another suitable pension provider. Members should apply direct to SPPA.

Current member's annual statements

Current members whose pensionable service has not terminated before NPA have a right to information about the amount of their own and their survivors' benefits which would be payable from normal retirement age, if their service were to terminate, or on their subsequent death.

To facilitate this, and based on the latest information provided by the employer (normally to 31 March in the previous financial year), an Annual Statement is normally issued annually to members by SPPA. One statement in a 12 month period is necessary to fulfil our obligations under Disclosure requirements,

Members leaving NHS will not be given an automatic statement of accrued benefits. Thereafter this information is provided on request but not more than once in any 12 month period.