What happens to your pension if you leave or opt out?
If you’re leaving your post in the NHS in Scotland or you’re considering opting out of the pension scheme, you have a number of options available to you. Just choose from the options below that best describe your circumstances to find out more about the choices you can make.
Your NHS pension is a valuable benefit.
Before leaving the NHS pension scheme you should carefully consider all your options, comparing any costs and the value of the many benefits provided by the scheme. It’s also worth taking independent financial advice. Remember, if you remain in the scheme you’ll continue to benefit from:
- A pension payable for life upon retirement (after two years’ qualifying service)
- The option to take part of your pension as a tax-free lump sum when you retire
- Tax relief on any contributions you pay into the scheme
- Valuable benefits for your dependants if you die
- The option to nominate an individual, or individuals, to receive a lump sum payable in the event of your death
- The option to increase your benefits by paying extra contributions which can be deducted along with your regular contributions or paid as lump sums
- The option to apply for ill-health retirement if you’re unable to work due to ill-health
Leaving NHS Scotland or transferring out of the scheme
If you decide to leave the NHS, we’ll be notified by your employer. Depending on the length of your qualifying service, the following options may be available to you:
Transferring benefits: You can transfer your benefits out of this scheme to another NHS pension scheme (for example one in England & Wales or Northern Ireland) or to a registered occupational pension scheme with defined benefits, such as a Local Government pension scheme. You’ll need to contact your new pension provider as soon as possible after joining their scheme, as they may have time limits on receiving a transfer.
Less than two years’ qualifying service: you may be eligible to apply for a refund of scheme contributions, or, if you intend to return to NHS employment in Scotland within five years, you may choose to preserve your accumulated pension benefits and link your different periods of service.
More than two years’ qualifying service: your accumulated pension benefits will be preserved and will be payable at the scheme’s normal pension age. These benefits will be re-valued annually in line with increases in the Consumer Price Index.
Re-joining the scheme: If you return to NHS employment in Scotland, you can re-join the scheme. Depending on the length of your break, your pensionable service may be linked for future benefit purposes.
Staying in NHS employment in Scotland but opting out of the pension scheme
Although you’re automatically enrolled in the NHS pension scheme, your membership isn’t compulsory. You can choose to opt out at any time after joining by completing an Opt Out form.
Opting out: If you opt out of the scheme, your employer will stop deducting pension contributions from your salary and advise SPPA that you are no longer an active member of the scheme. If you do leave the scheme you won’t accumulate any pension benefits during any period where you’re not an actively contributing member. You can re-join the scheme at any time by contacting your employer.
Auto-enrolment: If you opt out of the scheme, and you’re still employed by the NHS in Scotland, your employer will automatically enrol you back into the scheme every three years. You’ll also be automatically enrolled in the scheme if you start a new contract. You can, of course, opt out again, if you wish, after auto-enrolment.
Refund of contributions: If you have less than two years’ qualifying service* in the scheme when you opt out, you can apply for a refund of your contributions by indicating your preference for a refund on the Opt Out form. Tax will be deducted from the refund before it’s paid to you.
Fully protected members of the NHS Final Salary sections: If your break of contributions exceeds five years, you’ll only be eligible to join the Career Average Revalued Earnings (CARE) section of the scheme if you opt back in.