What happens when you return to work after you’ve started receiving pension benefits?
Although many people continue working in some form after they’ve started taking benefits from their NHS pension, you should be aware that returning to work can have an impact on the benefits payable to you.
Whether you plan to keep working with the NHS or with another employer after retirement, your new employment may be subject to certain restrictions once you’re receiving your pension. In some cases, employers may have strict rules regarding returning to employment after retirement so you should always check in advance.
Minimum 24 hour break in service
Before returning to NHS employment (or employment with an NHS direction body) anywhere in the UK or the Isle of Man after retirement, you’ll usually be required to have a minimum of 24 hours’ break in service before your pension can be paid. There may also be short-term limits on the number of hours you can work each week and the amount you can earn in your new post.
The 24 hour break in service should immediately follow your last day of NHS employment (inclusive of any unused annual leave) and can be taken on any day of the week, including weekends or bank holidays. The break starts the date your pension is payable from and applies to both active and deferred members.
There are a small number of exceptions to the 24 hour break rule. You don’t have to take a break if:
- you’re claiming partial retirement from the 2008 section or the 2015 scheme
- you have more than one NHS contract and one of your posts is making you redundant in the interests of service efficiency
- you’re in the 1995 section and have more than one contract, you must take a 24 hour break from one of your posts, but do not need to take a break from other contracts provided they're less than 16 hours a week
- you’re an active member of the 2015 scheme and you’re only claiming preserved benefits from the 1995 or 2008 Sections that aren’t linked to your current salary
- you’ve reached the maximum pensionable age of 75
- your new employer isn’t part of the NHS or one of its direction bodies.
Short-term restriction in hours
If you’re claiming benefits from the 1995 section (including any benefits linked to your final salary), you can’t work more than 16 hours a week for the first calendar month following your date of retirement or your pension will be suspended from the date you returned to work. This rule does not apply if:
- you’ve reached the maximum pensionable age 75
- you’re claiming benefits due to redundancy or in the interest of the efficiency of the service
- you’re claiming benefits on the grounds of ill health
- you’re working outside of the NHS.
Your pension will be put back into payment when you either:
- have a break in your contract for at least one calendar month.
- work 16 hours per week or less for a period of one calendar month.
- stop working in NHS employment.
- reach age 75 (or 70, if your last day of contributable service was before 1 April 2008).
Returning to work after upper tier ill-health retirement
If you return to NHS employment while receiving an upper tier ill-health pension, you’ll be limited to a maximum of 12 months’ NHS employment. If you exceed 12 months, your pension will be permanently reduced to the lower tier. If you do return to NHS Employment when you’re receiving an upper tier ill-health pension, you must inform SPPA.
If you retired before your normal pension age*, your post-retirement earnings may be subject to an earnings limit until you reach normal pension age. If you exceed the limit, your pension will be reduced until your earnings fall below the required level or you reach your normal pension age.
*Normal pension age: 1995 Section – 60; 2008 Section – 65; 2015 Scheme: State Pension age.
Earnings limits don’t apply to members who retire before their normal pension age due to voluntary early retirement or partial retirement.
Earnings limits (except for upper tier ill-health, see below) apply to earnings from NHS employment only and are calculated by subtracting your pension (including any injury benefits) from your pre-retirement earnings. In cases where a pension has been awarded as premature retirement or at lower tier ill-health, the figure used would be the equivalent pension had it been awarded as a voluntary early retirement award.
If you chose to commute some of your benefits to a lump sum, the value of pension used to calculate your earnings limit would be before any reduction for commutation.
If you have benefits in multiple sections of the scheme, each would be reduced up to that section’s respective normal pension age.
Earnings limits for upper tier ill-health pensioners
If you were awarded an upper tier ill-health pension, your gross earnings in any tax year are limited to the National Insurance Lower Earnings Limit set by HMRC. This applies to income from any source, not just NHS employment. Exceeding this limit will result in your pension being reduced from upper tier to lower tier from the point at which the limit is exceeded. You may be eligible to apply to have your pension reinstated to the upper tier level before you reach your normal pension age if you cease all employment and submit additional medical evidence supporting your application. This should be received no more than 12 months after the date you restarted employment. Please notify SPPA if you commence any type of re-employment after ill-health retirement.
Re-joining the scheme after retirement
If you were a 2008 section member with less than 45 years’ service, or a 2015 scheme member, you’re eligible to re-join the scheme in line with your protection status provided you still meet the eligibility criteria.
If you’re a 1995 section member you may be able to re-join if:
- you’re an active member of the 2015 scheme and your 1995 section benefits are not final salary linked, you may continue to contribute to the 2015 scheme
- you retired on ill health grounds and return to work before the age of 50
- you retired on or after 1st April 2008 and before 1st October 2009, you may be eligible to join the 2015 scheme.
NOTE: If you retired due to terminal ill health and opted to commute your benefits into a one-off lump sum, you can’t re-join the scheme under any circumstance.
If you re-join the scheme after retirement, you’re able to accrue further benefits which will be treated separately from those already in payment and can be applied for at a later date. If you’re a 2008 section members with final salary linked benefits, you can accrue further 2015 scheme benefits, but any increase in salary will not affect your final salary linked benefits.