The National Health Service Pension Schemes (Amendment) Regulations 2023 (‘the Regulations’) will come into force on 1 April 2023 in England Wales. These Regulations further amend the National Health Service Pension Scheme Regulations 1995 (‘the 1995 Regulations’), the National Health Service Pension Scheme Regulations 2015 (‘the 2015 Regulations’), and the National Health Service Pension Scheme (Transitional and Consequential Provisions) Regulations 2015 (‘the 2015 Transitional Regulations’).
It is intended that the Regulations will allow for new retirement flexibilities that, in turn, will hopefully help to reduce staff shortages and waiting times within the NHS by enabling the NHS to retain its older/most experienced workforce, and also assist with recruitment and retention in primary care.
The Regulations are amended to – amongst other things - allow for:
- pensionable (and flexible) re-employment
- removing the 16-hour rule
- permanent provision for scheme access for employees and practitioners working for a primary care network (‘PCN’)
Currently, eligible members of the NHS workforce belong to one of the 2 existing NHS pension schemes, namely the ‘new’ reformed 2015 Scheme (offered to all new NHS staff), and the older, closed scheme which is divided into the 1995 and 2008 Sections.
The key differences between the schemes, other than the way benefits are calculated, are different normal pension ages (‘NPAs’) and accrual rates. Under the 1995 Section the NPA is 60; for the 2008 Section it is 65; and under the 2015 Scheme, it is the State Pension Age, whatever that might be at the relevant time.
The 2015 Scheme was introduced as part of wider public sector reforms, and as part of these reforms, public service pension scheme members within 10 years of retirement were originally given transitional protection, and so remained in their legacy pension schemes.
In December 2018, the Court of Appeal found this protection to be discriminatory against younger members. This has become known as the ‘McCloud judgment’. The government accepted the judgment and has set out how the discrimination will be remedied. This is known as the ‘McCloud remedy’, and in the NHS, means that many members will now have pensions in both the 1995 Section as well as the 2015 Scheme i.e after retiring and returning.
At the time the 1995 Section was designed, retirement patterns were understood to be relatively clear - staff would typically work full-time until claiming their benefits and retiring. At retirement, members were unlikely to return to NHS service, and as a consequence, the rules of the NHS Pension Scheme restricted the incentive to do so by preventing any further pension accrual.
In today’s society, however, work, and in turn, retirement, is often more of a flexible and fluid concept, resulting from a range of factors including but not limited to increased education, housing and living costs; the desire to have a work/life balance; and also, people living longer. As a consequence, retirement is often gradual, and many people choose to return to work even after initially retiring.
Changes made by the Regulations
The changes made by the Regulations offer the NHS workforce increased options at the end of their careers, so that they can partially retire, or return to work and continue to build their pension after retirement if they so wish.
In respect of primary care, it also allows more people to join the NHS pension scheme ie those within PCNs (as there was previously only a time-limited route to access the NHS scheme).
It is hoped that these changes, and increased flexibility, will lead to more people (joining and) staying in the NHS for longer, and, in turn, this will benefit service provision in terms of better care, shorter wait times and other benefits.
- Retire, return and re-join
- From 1 April 2023, all members will have the option to retire and re-join the pension scheme.
- Members can retire and take their full pension, then return to work after a break of at least 24 hours and re-join the 2015 NHS Pension Scheme to earn further benefits.
- Whilst already available to members of the 2008 Section or 2015 Scheme, from 1 April 2023 it will also be an option for members who have retired with 1995 Section benefits.
- This may help some retired staff to bridge the gap between claiming their NHS pension benefits and receiving their State Pension while supporting NHS capacity.
- Removal of the 16-hour rule
- Currently, the 1995 Section rules limit members to working 16 hours a week in the first month after retirement to avoid their pension payments being affected.
- The 16-hour rule has been suspended since 25 March 2020, and the Regulations allow for its permanent removal from 1 April 2023.
- The consequence of this is that, as long as a member has had a break of 24 hours from their previous job, they will be able to move to a new employment contract and start building 2015 Scheme pension benefits immediately.
- Members with more than one employment will need to take a 24-hour break from all employments to be able to claim their pension.
- Access to the NHS Pension Scheme for PCN employees
- Although there was previously a temporary provision to allow practitioners and employees working as part of a primary care network (‘PCN’) access to the NHS pension scheme, the Regulations have given this more permanence.