Scheme benefits

Arrangements for members of the 1995 section

Members of the 1995 section are entitled to receive payment of their benefits at normal retirement age (NPA) of 60 without reduction.  The NPA of 60 is not a mandatory age for retirement - members can continue in pensionable employment and claim their benefits on eventual retirement subject to scheme age limits.

There are exceptions to the NPA of 60 for members who hold special class status and Mental Health Officers (MHO) who, provided that they meet the required criteria can receive payment of their benefits without reduction from age 55.

Benefits Payable

Annual pension equal to 1/80th of the member's pensionable pay at retirement for each year of service. (The pensionable pay would be the best pensionable pay from within the last 3 years up to retirement).

Lump sum retiring allowance equal to 3 times the value of the annual pension.

However, men with membership prior to 25th March 1972 who are, or have been married and did not take up the option to purchase an unreduced lump for membership prior to this date will only receive 1 times the value of annual pension for service prior to this date.

It should also be noted that some members may have consented to have outstanding contributions deducted from their lump sum retiring allowance. This will reduce the lump sum allowance paid on retirement.

In addition HMRC restrictions can apply to payment of a lump sum where a member has reached age 75. If you need further guidance, please contact us.

Lump Sum Choice (Commutation)

The regulations were amended from 1st April 2008 to allow members in pensionable employment on or after that date the option to give up part of their annual pension in order to receive a larger retirement lump sum payment. The maximum retirement lump sum, a member will be able to take tax-free is £268,275, unless they have lifetime allowance protection from HMRC.  In turn the member will receive £12 for every £1 pension.

Effect on re-employment within the NHS after age retirement

Payment of retirement benefits may be affected if a member of the 1995 section becomes re-employed after taking payment of their retirement benefits.

Application for payment of age retirement benefits

When a member wishes to retire their employer should provide them with the NHS: RET form.

Arrangements for members of the 2008 section 

Members of the 2008 section are entitled to receive payment of their benefits at normal retirement age (NPA) of 65 without reduction. The NPA of 65 is not a mandatory age for retirement - members can continue in pensionable employment and claim their benefits on eventual retirement subject to scheme age limits.

Members of the 2008 section who work beyond NPA of 65 will have the element of benefits that they accrued prior to age 65 increased by actuarial factors. This is known as "late retirement".

Benefits payable

Annual pension equal to 1/60th of the annual average of the best 3 years consecutive pensionable pay in the 10 calendar years before retirement.

No automatic retirement lump sum provision*

*If the member opted to move to the 2008 section under the Choice exercise their pension will be reduced in order to provide a mandatory lump sum. This does not affect the member’s ability to commute their benefits.

Lump Sum Choice (Commutation)

Members of the 2008 section receive a higher accrual rate of pension but do not in turn receive a retirement lump sum*. They can, however, opt to give up part of their annual pension in order to receive a lump sum payment on retirement. The maximum retirement lump sum, a member will be able to take tax-free is £268,275, unless they have lifetime allowance protection from HMRC.  In turn the member will receive £12 for every £1 pension.

*see above for 2008 Optant/Choice members

Partial retirement

A member of the 2008 section who has reached minimum pension age (MPA) of 55 can elect to access some of their benefits and continue working. They can do this on 2 occasions only and must not extinguish their entitlement to benefits prior to actual retirement.  See the Partial Retirement tab for further information.

Effect on re-employment within the NHS after retirement

Members of the 2008 section can in certain circumstances become re- employed and re-join the scheme if under age 75. Members can then accrue further membership and qualify for a second benefit.

Application for payment of retirement benefits

When a member wishes to retire, their employer should provide them with the NHS: RET form. 

Arrangements for members of the 2015 scheme 

Members of the 2015 section are entitled to receive payment of their benefits at normal retirement age (NPA) of State Pension Age (SPA) without reduction. The SPA is not a mandatory age for retirement - members can continue in pensionable employment and claim their benefits on eventual retirement subject to scheme age limits.

Members of the 2015 section who work beyond SPA will have the element of benefits that they accrued post SPA increased by actuarial factors. This is known as "late retirement".

Benefits payable

NHS 2015 officer and practitioner members earn benefits on a CARE basis. We multiply each year’s salary by 1/54 to give a pension earned in that year. At the end of each year, we revalue this pension in line with increases to the Consumer Prices Index (plus 1.5% for active scheme members).

Members can exchange some of this pension for a lump sum when they retire.

Lump Sum Choice (Commutation)

Members of the 2015 section receive a higher accrual rate of pension but do not in turn receive a retirement lump sum. They can, however, opt to give up part of their annual pension in order to receive a lump sum payment on retirement. The maximum retirement lump sum, a member will be able to take tax-free is £268,275, unless they have lifetime allowance protection from HMRC.  In turn the member will receive £12 for every £1 pension.

Partial retirement

A member of the 2015 section who has reached minimum pension age (MPA) of 55 can elect to access some of their benefits and continue working. They can do this on 2 occasions only and must not extinguish their entitlement to benefits prior to actual retirement.  

Effect on re-employment within the NHS after retirement

Members of the 2015 section can in certain circumstances become re-employed and re-join the scheme if under age 75. Members can then accrue further membership and qualify for a second benefit.

Application for payment of retirement benefits

When a member wishes to retire, their employer should provide them with the NHS:RET form. 

The NHSSSS allows for members to take Voluntary Early Retirement with Actuarial Reduction (VERA). The amount of Actuarial Reduction (AR), which differs between the 1995 section and the 2008 section, depends on the member's age in years and months at the point of VERA. The AR, which applies to the annual pension and lump sum payment, is to take account of these retirement benefits being paid earlier than they normally would be

Current members of the scheme must have at least 2 years scheme membership to become eligible for VERA. Members with benefits preserved on or after 31st March 2000 are also eligible for VERA.

Arrangements for members of the 1995 section

Members of the 1995 section may elect to receive payment of their VERA benefits from MPA of 50 onwards.  Any reduction applied is in line with the factors detailed in the table below, which are based on age 60 retirement, regardless of whether the member has Special Class status or is a MHO. VERA benefits will remain at the reduced level for life, however, dependant benefits are not based on the reduced level of benefit.  

Members with Special Class/MHO status have a NPA of 55 are not eligible for VERA after they have reached this age as normal age retirement applies.

VERA benefits for male scheme members with Special Class status will only be based on their membership post 17th May 1990. The remaining membership will be preserved for payment at their NPA of 60.

Guaranteed minimum pension (GMP)

The scheme provides for a level of benefit equal to or greater than the value of the GMP if applicable. Please see our GMP page for further information if required.

Benefits Payable

Annual pension equal to 1/80th of the best of last 3 years pensionable pay for each year of service with the appropriate reduction applied.

Lump sum retiring allowance equal to 3 times the annual pension with the appropriate reduction applied.  

However, men with membership prior to 25th March 1972 who are, or have been married, and did not take up the option to purchase an unreduced lump for membership prior to this date will only receive 1 times the value of annual pension with the appropriate reduction applied for service prior to this date.

It should also be noted that some members may have consented to have outstanding contributions deducted from their lump sum retiring allowance. This will reduce the lump sum allowance paid on retirement. For example, the exercise to convert.

VERA Factors – 1995 section

Separate factors are applied to the pension and lump sum elements. The following table provides the approximate deduction which will be applied to the pension and lump sum for a member after taking VERA from the 1995 section arrangements.

Lump Sum Choice (Commutation)

The regulations were amended from 1st April 2008 to allow members in pensionable employment on or after that date the option to give up part of their annual pension in order to receive a larger retirement lump sum payment. The maximum retirement lump sum, a member will be able to take tax-free is £268,275, unless they have lifetime allowance protection from HMRC.  In turn the member will receive £12 for every £1 pension.  For members who opt to take VERA, the commutation is based on the appropriate AR value of benefits.

Effect of re-employment within the NHS after VERA

Payment of retirement benefits may be affected if a member of the 1995 section becomes re-employed after taking payment of their retirement benefits.  Further information is contained within Section 3.2 of this guide.

Application for payment of benefits

When a member wishes to take VERA their employer should provide them with the NHS: RET form.

Members of the 2008 section

Members of the 2008 section may elect to receive payment of their VERA benefits from MPA of 55 onwards.  Any reduction applied is in line with the factors detailed in the table below, which are based on age 65 retirement, VERA benefits will remain at the reduced level for life however dependant benefits are not based on the reduced level of benefit.  

Guaranteed minimum pension (GMP)

The scheme provides for a level of benefit equal to or greater than the value of the GMP if applicable. Please see our GMP page for further information if required.

Benefits payable

Annual pension equal to 1/60th of the annual average of the best 3 years consecutive pensionable pay in the 10 calendar years before retirement  with the appropriate AR applied.

No mandatory retirement lump sum provision*.

*If the member opted to move to the 2008 section under the Choice exercise their pension will be reduced in order to provide a mandatory lump sum. This does not affect the member’s ability to commute their benefits.

VERA Factors – 2008 section

The following table provides the approximate deduction which will be applied to the full pension payable after the member has taken VERA from the 2008 section arrangements.

Lump Sum Choice (Commutation)

Members of the 2008 section receive a higher accrual rate of pension, but do not in turn receive an automatic retirement lump sum*. They can, however, opt to give up part of their annual pension in order to receive a lump sum payment on retirement. The maximum retirement lump sum, a member will be able to take tax-free is £268,275, unless they have lifetime allowance protection from HMRC.  In turn the member will receive £12 for every £1 pension. For members who opt to take VERA, the commutation is based on the appropriate AR value of benefits.

*see 2.11 for 2008 Optant/Choice members

Effect of re-employment within the NHS after VERA

Members of the 2008 section can in certain circumstances become re-employed and re-join the scheme if under age 75. Members can then accrue further membership and qualify for a second benefit.

Application for payment of benefits

When a member wishes to take VERA their employer should provide them with the NHS: RET form.

Members of the 2015 scheme

Members of the 2015 section may elect to receive payment of their VERA benefits from MPA of 55 onwards.  Any reduction applied is in line with the factors detailed in the table below, which are based on State Pension Age retirement, VERA benefits will remain at the reduced level for life however dependant benefits are not based on the reduced level of benefit.  

Guaranteed minimum pension (GMP)

The scheme provides for a level of benefit equal to or greater than the value of the GMP if applicable. Please see our GMP page for further information if required.

Benefits payable

NHS 2015 officer and practitioner members earn benefits on a CARE basis. We multiply each year’s salary by 1/54 to give a pension earned in that year. At the end of each year, we revalue this pension in line with increases to the Consumer Prices Index (plus 1.5% for active scheme members).

Members can exchange some of this pension for a lump sum when they retire.

VERA Factors – 2015 scheme

The following table provides the approximate deduction which will be applied to the full pension payable after the member has taken VERA from the 2015 section arrangements.

Lump Sum Choice (Commutation)

Members of the 2015 section receive a higher accrual rate of pension, but do not in turn receive an automatic retirement lump sum. They can, however, opt to give up part of their annual pension in order to receive a lump sum payment on retirement. The maximum retirement lump sum, a member will be able to take tax-free is £268,275, unless they have lifetime allowance protection from HMRC.  In turn the member will receive £12 for every £1 pension. For members who opt to take VERA, the commutation is based on the appropriate AR value of benefits.

Effect of re-employment within the NHS after VERA

Members of the 2015 section can in certain circumstances become re-employed and re-join the scheme if under age 75. Members can then accrue further membership and qualify for a second benefit.

Application for payment of benefits

When a member wishes to take VERA their employer should provide them with the NHS: RET form.

In the event of the death of a current, deferred  or retired member, the scheme provides for the payment of Lump Sum on death and/or Survivor benefits, subject to certain conditions.­ The level of benefit is dependent on the member's circumstances at time of death.

Application for payment of death benefits must be made using the relevant application form:

• AW6 Death with Deferred Pension or Death in Receipt of Pension - Application Lump Sum on Death and Widow/Widower/Partner's Pension.
• AW7 Death in Service - Application for Award of Lump Sum on Death and Widow/Widower/ Non Legal Partner's Pension.
• AW9 Application of Award of Dependants Allowance.

Lump Sum on death

A Lump Sum on Death is payable to a either a widow, widower, civil partner, non-legal partner or a dependant. A member can elect to nominate one or more recipients to receive the lump sum on death, who may be an individual, a corporate or unincorporated body or the member's legal representative. In the case of a corporate or unincorporated body SPPA will require either a copy of the trust deed or organisation's constitution before acceptance of any election.

The nomination, which must specify the percentage to be paid to each nominee, must be given in writing to SPPA. This may be revoked or changed at any time. If, at the time of the death, it is not possible to pay to one or more of the nominees, the relevant percentage of the lump sum will be paid to the member's personal representative(s) or to the estate.

For members of the 1995 section, nominations may only be made by a member who is in pensionable employment at the time of making the nomination or a person whose pensionable employment ceased on or after 1st April 2008

Death lump sums derived from both the 1995 and 2008 sections and 2015 scheme are not normally taxable if the deceased was married or was living in a civil partnership. However, if the deceased was single and the sum is to be paid as part of their estate it will be taken into account by HMRC for Inheritance Tax purposes.

In cases where a death lump sum is being paid direct to a deceased's estate and the value is over £5000, SPPA will require to have the amount included in any Confirmation of Estate.

In line with HMRC rules, any payment of a lump sum on death must be paid within 2 years of death or it will attract a tax charge of up to 40%.

Level of Lump Sum on Death

The following is the level of death lump sum payable relative to both 1995 and 2008 section members and 2015 scheme members.

Members of the 1995 section:

Current member - 2 x the actual annual rate of pensionable pay or 2 x average annual earnings in the case of practitioner members

Deferred member - 3 x the preserved pension at date of death.

Pensioner member if death within 5 years of retirement - the lesser of:

The value of five years annual rate of pension (after commutation if member elected to commute part of their pension on retirement) less pension already paid to date of death; or

2 x pensionable pay less the actual lump sum received on retirement.

Members of the 2008 section:

Current member - 2 x the member's actual reckonable pay or 2 x average annual earnings in the case of practitioner members 

Deferred member -  deferred annual pension x 2.25.

Pensioner member - Please note that members of the 2008 section can take their pension and rejoin the scheme.  This option does not apply to members who have taken partial retirement.;

(a) Death within 5 years of retirement and was not also an active member at time of death - the lesser of:

The value of five years annual rate of pension (after commutation if member elected to commute part of their pension on retirement) less pension already paid to date of death; or

2 x  member's actual reckonable pay less the actual lump sum received on retirement.

(b) Death within 5 years of retirement and was also an active member at time of death:

For period of pension in payment of less than 5 years, the lesser of:

The value of five years annual rate of pension (after commutation if member elected to commute part of their pension on retirement) less pension already paid to date of death; or

reckonable pay less the actual lump sum received on retirement.

For the active period of membership prior to death and if under age 65 at time of death - 5 x the value of a notional lower tier ill health pension.

For the active period of membership prior to death and if over age 65 at time of death - 5 x the value of a normal retirement pension.

(c) Death within 5 years of electing to opt to take partial retirement

2 x  the appropriate fraction of the annual rate of reckonable pay at date of death plus the lesser of,

5 x the annual pension taken under partial retirement less the pension already paid or the value of the appropriate fraction of pensionable pay on which the last option was exercised less the lump sums paid under  all options.

Members of the 2015 scheme:

Current Member - A lump sum is paid of twice the average of the member’s total annual pensionable earnings in a 12-month period.

Deferred Member - deferred annual pension x 2.025.

Pensioner Member - Lesser of:

1) 5 x pension – pension already paid

Or

2) DIS that would have been paid on LDPS – lump sum paid

Survivor benefits

Survivor benefits can be payable to the deceased member's:

• Widow
• Widower
• Civil partner
• non-legal partner/Dependant(s)

Members of the 1995 section

Initial rate pension following Death 

There is no qualifying period  for payment of an initial rate pension. However, initial rate pensions only apply in the following circumstances.

Death in Service

The Initial Pension is paid by NHS employers if the member was legally married or in a registered civil partnership at the date of death.

Payment is made regardless of any child allowances that may be payable. The initial rate pension is payable from the day after death, extended by any untaken annual leave, for a period of 6 months  at the rate of pensionable earnings at death. 

Employers should notify SPPA on commencement of payment by using form AW10 Notification of Payment of Widow/Widower/Civil Partners/Non Legal Partner Initial Pension.

The initial rate pension is then reclaimed by the employer from SPPA at the end of the payment period using form AW10/1 Claim for Reimbursement of Payment of Widow/Widower/Civil Partners/Non Legal Partners Initial Pension.

From 1st April 2008, a member may nominate a non-legal partner to receive a survivor benefit based on scheme membership from 1st April 1988. Members of the 1995 section could have chosen to purchase their pre 1 April 1988 service to be included in survivor benefits. This choice was available during a limited time period which has now ended for 1995 section members.

If at time of death SPPA hold a nomination from the member any application received from the partner  will need to be validated by SPPA before payment can be made. In these cases SPPA will contact the employer to ascertain the rate of pensionable pay at death and make the payment of any Initial Pension.

GP practice staff will be paid by SPPA as at present for a period of 6 months.

Death on Pension

An Initial Pension may be paid by SPPA if the member was legally married, in a registered civil partnership or had a non-legal partner. The initial rate is payable for a period of 3 months and is extended to 6 months if there are dependent children.

Continuing Rate pension

Continuing rate pensions are determined by marital status and status of membership at time of death. To be entitled to a continuing rate pension the deceased member must have completed the minimum period of membership required for payment of a benefit from the scheme.

Death in Service – 1995 section

Widow

½ rate pension based on a notional upper ill health for all membership.

Widower, Civil Partner, Non legal partner

½ rate pension based on upper tier ill health for membership only from 1st April 1988.

If the member has purchased pre 6th April 1988 service in respect of their surviving partner then this would be added to the service figure pre any enhancement.

Death within 12 months of leaving the scheme with entitlement to a preserved pension

Widow

½ rate pension based on a notional upper ill health for all membership up to date of leaving.

Widower, Civil Partner, Non legal partner

½ rate pension based on upper tier ill health for membership up to date of leaving but only for membership from 1st April 1988.

If the member has purchased pre 6th April 1988 service in respect of their surviving partner then this would be added to the service figure pre any enhancement.

Death with preserved benefits

Widow

½ rate pension based on preserved pension.

Widower, Civil Partner, Non-legal partner

½  rate pension based on preserved pension for membership only from 1st April 1988.

If the member has purchased pre 6th April 1988 service in respect of their surviving partner then this would be included.

Death on Pension

Widow

½ rate pension based on pension in payment.

Widower, Civil Partner, Non legal partner.

½ rate pension based on membership only from 1st April 1988.

Members of the 2008 section

Initial rate Pension following Death

As with the 1995 section, there is no qualifying period for payment of an initial rate pension. However, initial rate pensions only apply in the following cases:

Death in Service

Paid by NHS employers if the member was legally married or in a registered civil partnership. Payment is made regardless of any child allowances that may be payable. The initial rate pension is payable from the day after death for a period of 6 months  at rate of pensionable pay salary on death.  SPPA should be notified at the start of payment by using form AW10.  The initial rate pension is then reclaimed by the employer from SPPA at the end of the period using form AW10/1.

GP practice staff will be paid by SPPA as at present for period of 6 months.

If a member has a qualifying non-legal partner they may be eligible to receive a survivor benefit.  Any application received from the partner will need to be validated by SPPA before any payment can be made. In these cases SPPA will contact the employer to ascertain the rate of pensionable pay at death and make the payment of any initial rate pension.

Death on Pension 

Paid by SPPA if the member was legally married, in a registered civil partnership or has an eligible non-legal partner. The initial rate is payable for a period of 3 months and is extended to 6 months if there are dependent children.

Death re employed pensioner 

If the deceased was a pensioner who had re-joined the scheme after taking payment of their benefits the initial rate is 6 months.

Continuing Rate pension

To be entitled to a continuing rate pension the deceased member must have completed the minimum period of membership required for payment of a benefit from the scheme.

Death in Service

Widow Widower, Civil Partner, Non-legal partner

Pension at rate of 37.5% based on a notional upper ill health for all membership.

Death within 12 months of leaving the scheme with entitlement to a preserved pension

Widow Widower, Civil Partner, Non-legal partner

Pension at rate of 37.5% based on a notional upper ill health for all membership up to date of leaving.

Death with preserved benefits

Widow Widower, Civil Partner, Non-legal partner

Pension at rate of 37.5% based on preserved pension.

Death on Pension

Widow Widower, Civil Partner, N Non-legal partner

Pension at rate of 37.5% based on pension in payment.

Death re employed pensioner

Pension at rate of 37.5% based on pension in payment taking into account any abatement of pension also,

Pension at rate of 37.5% based on re employed active membership at time of death.

Additional Pension (AP) Purchased for surviving partner

A member can make additional provision for survivor benefits by purchasing AP to include additional survivor cover.  The Basic AP purchased is revalued  in line with any changes arising from the pensions increase act between the date the option commenced and point of payment. For completed contracts the surviving partner will receive 37.5% of the amount of increase that the member would have received.

If the contract to purchase is not completed at time of death, the following will apply: Death within 12 months of taking out Option

The contributions to the member/members personal representative are refunded by SPPA.  If the employer had opted to make additional pension payments then SPPA would also refund those payments to the employer,

Death after 12 months of taking out option

The surviving partner will receive an increase equal to that of a completed contract.

Members of the 2015 Scheme

Initial rate Pension following Death

As with the 1995 section, there is no qualifying period for payment of an initial rate pension. However, initial rate pensions only apply in the following cases:

Death in Service

Paid by NHS employers if the member was legally married, in a registered civil partnership or had an eligible non-legal partner. Payment is made regardless of any child allowances that may be payable. The initial rate pension is payable from the day after death for a period of 6 months  at rate of pensionable pay salary on death.  SPPA should be notified at the start of payment by using form AW10.  The initial rate pension is then reclaimed by the employer from SPPA at the end of the period using form AW10/1.

GP practice staff will be paid by SPPA as at present for period of 6 months.

If a member has a qualifying non-legal partner they may be eligible to receive a survivor benefit.  Any application received from the partner will need to be validated by SPPA before any payment can be made. In these cases SPPA will contact the employer to ascertain the rate of pensionable pay at death and make the payment of any initial rate pension.

Death on Pension

Paid by SPPA if the member was legally married, in a registered civil partnership or has an eligible non-legal partner. The initial rate is payable for a period of 3 months and is extended to 6 months if there are dependent children.

Death re-employed pensioner

If the deceased was a pensioner who had re-joined the scheme after taking payment of their benefits the initial rate is 6 months.

Continuing Rate pension

To be entitled to a continuing rate pension the deceased member must have completed the minimum period of membership required for payment of a benefit from the scheme.

Death in Service

Widow Widower, Civil Partner, Non-legal partner

Pension at rate of 33.75% based on a notional upper ill health for all membership.

Death within 12 months of leaving the scheme with entitlement to a preserved pension

Widow Widower, Civil Partner, Non-legal partner

Pension at rate of 33.75% based on a notional upper ill health for all membership up to date of leaving.

Death with preserved benefits

Widow Widower, Civil Partner, Non-legal partner

Pension at rate of 33.75% based on preserved pension.

Death on Pension

Widow Widower, Civil Partner, N Non-legal partner

Pension at rate of 33.75% based on pension in payment.

Death re employed pensioner

Pension at rate of 33.75% based on pension in payment taking into account any abatement of pension also,

Pension at rate of 33.75% based on re employed active membership at time of death.

Additional Pension (AP) Purchased for surviving partner

A member can make additional provision for survivor benefits by purchasing AP to include additional survivor cover.  The Basic AP purchased is revalued  in line with any changes arising from the pensions increase act between the date the option commenced and point of payment. For completed contracts the surviving partner will receive 33.75% of the amount of increase that the member would have received.

If the contract to purchase is not completed at time of death, the following will apply: Death within 12 months of taking out Option
The contributions to the member/members personal representative are refunded by SPPA.  If the employer had opted to make additional pension payments then SPPA would also refund those payments to the employer.

Death after 12 months of taking out option

The surviving partner will receive an increase equal to that of a completed contract

Child Allowance all sections

An allowance is now payable to a dependent child of a member whose pensionable service ended on or after 1st April 2008, until they reach age 23. An allowance can only continue to be paid after that age to a child who is incapable of earning a living because of permanent physical or mental infirmity which existed at the date of death.

The allowance will be paid from day after the date of death by SPPA.

Child allowances are either a proportion of a notional upper tier ill health pension based on the member's service or 10 years membership, whichever is the most beneficial to the child.  In the case of a member who worked part time any benefit would be scaled down accordingly. Application for payment can be made by completing form AW9.

Premature retirement on redundancy or in the Interests of efficiency on or after 1 December 2006

The way in which a member can access early payment of benefits from the scheme on being made redundant changed from 1st December 2006 (subject to certain criteria). These changes were made in conjunction the revised UK agreement for employer compensation payments on redundancy.

The qualifying criteria are:

• Members must have 2 years qualifying membership.
• The employer must certify that the member has had at least 2 years continuous NHS employment.
• The member has not reasonably refused to apply for alternative employment or accept an offer of suitable employment.
• The member has attained minimum pension age.

The employer must also certify that the employment is being terminated:

• By reason of redundancy.
• In the interests of efficiency of the service.

Members over minimum pension age with 2 years qualifying service - all sections

New arrangements

Members can apply for payment of an unreduced pension and lump sum based on their membership to the date of the termination of employment, with no actuarial reduction applied to the benefits.

If the member elects to receive payment of an unreduced pension, the costs of paying the pension benefits will be capitalised by the employer and will be offset against any possible redundancy payment.

If the payment of the capitalised cost of the members benefit by lump sum is less than the value of the redundancy payment, the employer must pay the difference to the member.

Members with Concurrent Employment

Members can choose whether to take their benefits from the employment that is being terminated and continue in pensionable employment in respect of the remaining pensionable posts or, take their benefits in respect of all pensionable employment. If the member elects to take this option they will not be able to re-join the scheme in respect of any further NHS employment.

Practitioner members

Practitioner members who have concurrent practitioner and non-practitioner employment can receive benefits on redundancy grounds from the non-practitioner employment that is being terminated. If the practitioner elects to retire from all pensionable employment any benefits payable for practitioner membership would be paid on an early retirement basis with actuarial reduction applied for payments made before NPA.

This part of the guide on ill health retirement applies to both members of the 1995 and 2008 sections and 2015 scheme.  However, there are occasions where there are differences and these are noted separately.

Employers and their Occupational Health Advisers should look at ways of helping members to remain in or return to work e.g. re-deployment, part-time working, transferring to a post with less responsibility or consider other workplace adjustments before concluding that ill health retirement may be appropriate.

Ill health benefits can be granted by SPPA (on behalf of Scottish Ministers) if they are satisfied that the applicant has become permanently incapable of "discharging efficiently the duties of their employment by reason of physical or mental infirmity" until Normal Pension Age (NPA) i.e. age 60,65 or State Pension Age. The member must have completed a qualifying period of 2 years.

There are two levels of benefits that can be awarded:

Lower Tier and Upper Tier

To qualify for lower tier a member must be assessed as being permanently unable to do their own job.

To qualify for Upper tier a member must be assessed as being permanently unable to do their own job and also could not undertake any other job across a general field of employment to the same extent as the member was undertaking in their own job.

Within the scope of upper tier there is the recognition that the ability to undertake some therapeutic work can assist scheme members to manage their condition.  This allows members to earn up to the Lower Earnings Limit for National Insurance contributions each tax year without losing access to their upper tier pension.

The Medical Adviser (MA) appointed by SPPA may also recommend that the member may be awarded Lower tier with the option to have a re-assessment to upper tier within a 3 year period.  This recommended period will start from the date of the award and the onus is on the member to instruct SPPA of their wish for a re-assessment and to submit further medical evidence.  Neither subsequent conditions nor deterioration related to ageing will be taken into account at the reassessment.

How to apply for Ill Health retirement

If the member is still employed in the NHS they should apply on form AW8.  This should be completed and returned to SPPA by the employer together with:

Supporting medical evidence – copies of all specialist or hospital correspondence relating to the present illness(s) should be included. This may include a GP, OH, Specialist, Registrar, Consultant or other report. Full details of sick absences including start date, end date and full reasons for the absence. A current job description.  This allows the MA to assess on the job the member holds. Details of redeployment or rehabilitation considered.  This allows the MA to assess whether all other options (where possible) have been considered and A completed AW8 MED.   More than one AW8 MED can be submitted with each application.

SPPA will not refer an application to the MA for consideration until all of the above information is received.

Where a condition is severe enough to warrant ill health retirement, whether this be a psychiatric or physical complaint, it is not unreasonable to expect that the applicant should have had the benefit of a specialist opinion.  It would greatly help in the consideration of the application if the medical information is provided by a specialist. If this is not possible or the applicant has not been referred to a specialist, the AW8 Med should be completed by the applicant's Occupational Health Physician or GP.

In order for the application to be valid, the declaration on the application form must be signed and dated by the applicant and the certification must be completed by the employer.

All incomplete applications or applications with insufficient evidence will be returned by SPPA to the employer.  If an application does not contain enough medical evidence and supporting documents it is unlikely to succeed.

The decision

As the decision to award ill health retirement benefits is based solely on the paper evidence provided, it is in the employer and member's interest to ensure that the application contains all relevant information to support it.

It is on this information that the MA will assess the application and make a recommendation to SPPA.  SPPA will make the final decision.

Notification of the decision

Both the employer and the member will be notified by letter of SPPA's decision.

If the application is accepted employers must ensure that the member's service ceases on the day of termination completed by payroll on the AW8 application form.  Any amendment to the date of termination should be sent to SPPA immediately by Payroll.  SPPA will put the pension into payment as soon as possible thereafter.

Where the application is not accepted or the member is awarded lower tier,    they can apply to have this decision reviewed through SPPA's Internal Dispute Resolution Procedures, Stage 1.  Details are included in the member's letter and further information on the IDRP process is available here.

Enhancement

If a member is awarded lower tier, they will receive a pension based on the service accrued to date with no enhancement of service.

If a member is awarded upper tier, they will receive an enhancement of up to 2/3 of their prospective membership to NPA for the 1995 and 2008 sections and 50% of their prospective membership to SPA for the 2015 section

Enhancement for members in part time employment

If a member in part-time employment becomes entitled to an ill health pension the member's pensionable service will count at its full length for the purpose of calculating enhancement.  The enhancement will be based on the whole-time equivalent of the member's pensionable service in respect of part-time employment and the enhancement will be calculated as a proportion of the whole-time equivalent for the part-time hours worked.

Terminal Illness

If a member is seriously ill and it has been confirmed from medical evidence that their life expectancy is less than 12 months, they may apply to commute (convert) their pension into a one off lump sum. The member should complete the relevant part of the application to indicate that they wish to commute their pension. This request must be made when the application is made as it cannot be made after the pension is put into payment.  Dependant's pensions will not be affected if the member applies for commutation and they will get any pension they are entitled to in full.

Terminal Illness applications are fast tracked. On receipt of the application and evidence (at least one medical confirmation of life expectancy of less than 12 months must be supplied) the cases are faxed to the MA who will usually respond within 24 hours. In such cases, it is not necessary for the employer to delay an application to SPPA if there is no job description, details of re-deployment etc.

Members buying Additional Service, an Unreduced Lump Sum or Additional Pension

Members in the 1995 section had the option (until the reforms in 2008) to purchase Additional Service or an Unreduced Lump Sum.   1st April 2008 saw the introduction of Additional Pension for all members.

Irrespective of which section of the scheme the member is in, if the member is buying additional service, an unreduced lump sum or additional pension by deductions from their pay and are approved for ill health retirement, they will not have to make any further payments towards this.  They will be credited with the full amount of additional years of service/pension on what they would have had at the end of their contract provided that they are under NPA when they retire, they were in good health when they started the contract and have paid for at least 12 months before they applied for ill health retirement.   Part-time members will receive a proportion of the service purchased accordingly.

Commutation

1995 members with a NPA of 60 receive a pension and a lump sum.  They also have an option to take a higher lump sum by surrendering £1 of annual pension for £12 of lump sum.

2008 members with a NPA of 65 receive a pension only*.  They have the flexibility to take up to 25% of "capital value of pension fund" after commutation as a tax value of their pension to give themselves a lump sum. 

*2008 Choice Optant members will receive a mandatory lump sum and will have the option to commute their benefits up to 25% of "capital value of pension fund" to give themselves a lump sum.

2015 members with a NPA of SPA receive a pension only.  They have the flexibility to take up to 25% of "capital value of pension fund" after commutation as a tax value of their pension to give themselves a lump sum.

Members no longer in the pension scheme

Members with preserved benefits who left the scheme within the last 12 months and no longer work for the NHS or  opt out of the pension scheme but are still working for the NHS may apply to have their benefits paid early with no enhancement if they have at least 2 years’ service and are permanently incapable of carrying out the duties of their employment. These members should complete form AW8 and  ask their employer to complete form AW8 Med and return to SPPA along with all medical evidence of their permanent inability to do any regular work.

Members with preserved benefits who no longer work in the NHS may apply to have their benefits paid early with no enhancement if they have at least 2 year's preserved service and are permanently incapable of doing any regular work.  These members should complete form AW8P and AW8P Med and return to SPPA along with all medical evidence of their permanent inability to do any regular work.

Returning to NHS employment after retiring due to ill health

Ill health benefits are awarded because the member has been found to be permanently unable to do their own job.

If they have been awarded lower tier benefits and return to NHS employment their benefits may be reduced, this is known as 'abatement'.

If the member is awarded upper tier they may not re-join the NHS pension scheme.

Members are advised to contact SPPA directly about the effects of re-employment whilst in receipt of ill health benefits.

The Ill Health section of our website can tell you more about Ill Health retirement.

Members can allocate part of their pension on retirement to provide a pension to a beneficiary after their death.

A member can allocate in favour of one person only e.g. to a spouse, civil partner, non-legal partner or to a close member of family. (i.e. someone who is wholly or partially dependant on them for support).

The allocated pension will be paid in addition to any widow's, widower's, civil partner, non-legal partner or child allowance payable.

Members can allocate if they are a current or deferred member of the scheme. Allocation can only be made if the member is in good health, having regard to their age. Therefore, before SPPA can accept an allocation, we would require the member to undergo a medical examination by their GP. The person nominated does not have to be examined.

N.B: The cost of any medical fees incurred would be payable by the member.

Timescale for Application

In line with HMRC rules, any allocation of benefit must be made before the members benefits become payable. We cannot accept an election to allocate once payment has been made.

1995 section members can also allocate whilst in pensionable employment;

• At any time after completing 45 years pensionable membership (if not a special class member).
• At any time after reaching age 55 or completing 40 years membership (special class member).
• At any time after reaching age 65 (60 in the case of special class members).

2008 section members can also allocate whilst in pensionable employment;

• If the member is in pensionable employment after reaching the age of 65, at any time after reaching that age and before reaching the age of 75.

2015 section members can also allocate whilst in pensionable employment;

• If the member is in pensionable employment after reaching State Pension Age, at any time after reaching that age and before reaching the age of 75.

An allocation may only be cancelled in the period of time between a member applying to make an allocation and the date SPPA notifies them that it has been accepted. Once an allocation has been accepted it cannot be cancelled, even if the person that has been allocated the benefits dies before the member. The allocated value of the NHS pension will never be restored to the member.

The amount that can be allocated

The member can allocate up to one third of their pension and must allocate an exact number of pounds. In doing so it must provide:-

• The beneficiary with a pension of not less than £260.00 a year.
• The total value of pension payable to the beneficiary must exceed the amount that can be commuted to a one off lump sum under HMRC rules.

The member must be left with more pension than the beneficiary. They cannot be left with less than the guaranteed minimum pension required under the Social Security legislation.

Beneficiary Pension Level

The amount of pension payable to a beneficiary  in return for every £1 the members allocates  is dependent on:

• Age
• The beneficiary's age
• Whether the beneficiary is male or female.

Employing Authority action

The employee can obtain a copy of form NHS (ALLOC) here.

• From 1 October 2023, all members of the NHS Pension Scheme will be able to partially retire and take part, or all, of their pension benefits from age 55 and continue in NHS employment.
• Members who wish to take Partial Retirement will need to agree a new working arrangement with their employer that lets them reduce their pensionable pay by at least 10%.
• Changes to the pension scheme rules from 1 April 2023 mean that retired members of the 1995 Section of the scheme now have the option to return to work, re-join the 2015 NHS Pension Scheme and earn further pension benefits after a break of at least 24 hours.

Our Flexible Retirement Employer Guide includes more information to help you implement these changes effectively and details:

• Changes to rules for 1995 Section members from 1 April 2023
• Eligibility to re-join the NHS Pension Scheme for members following retirement from 1 April 2023
• Introduction of Partial Retirement for 1995 Section members from 1 October 2023, meaning from age 55, members can claim between 20 and 100% of pension benefits while they keep on working
• How members can achieve the required 10% reduction in pensionable pay
• How to process applications for Partial Retirement
• Flexible working for staff in the later stages of their career
• Frequently Asked Questions

You can find out more in our Flexible Retirement Employers Guide.