Partial retirement options opened up to help stop workforce exodus
By Edie Bourne
Doctors will be able to retire from the NHS, take pension benefits and then rejoin the pension scheme under officially confirmed new rules.
They will also be able to partially retire while retaining their current job role.
The outcome of the Department of Health and Social Care’s (DHSC’s) consultation into NHS retirement flexibilities was published last month after eight weeks of consideration.
As well as improving retirement options for doctors, the plans include changes to the pension valuation method which can lead to additional tax payments.
Retire and rejoin
From April, doctors can retire, draw their NHS Pension benefits and rejoin the 2015 scheme to accrue further benefits – to be known as ‘retire and rejoin’.
There is no set limit to the pension benefits which can be accrued, as long as the member is under 75.
The previous 16-hour maximum working limit for the first month after ‘retirement’ has also been removed, but a minimum 24-hour break is required before re-joining.
From October this year, doctors can also take partial retirement while keeping their job role and current terms and conditions. This will allow members of the 1995 section to enjoy the same facility as those in the 2008 section and 2015 scheme.
The new plans give those age 55 and over the choice to take up to 100% of their pension benefits.
Patrick Convey, technical director at specialist financial planners Cavendish Medical, said: ‘The consultation outcome has provided many positive steps – something we’re not used to seeing for doctors pensions in recent years.
‘Along with the Budget news reducing pensions’ tax limits, there may be more options to discuss for those planning retirement.
‘We are also pleased that those who would like to continue working are able to do this while accessing their benefits.
‘However, there are nuances to consider. Those wishing to apply for the partial retirement opportunity must agree to reduce their pensionable pay by at least 10%. This may prove particularly challenging for consultants who work a set number of programmed activities.
‘We await further guidance from the DHSC on how this might work in practice, but it could involve an agreement between the employer and consultant to make some PAs non-pensionable, for example.’
One of the other key outcomes from the consultation is a revision to the way pension growth is valued.
From the 2022-23 tax year onwards, the date that the 2015 pension scheme is revalued each year will be moved.
On 1 April each year, the 2015 pension is revalued to keep in line with the cost of living, using the Consumer Price Index rate from the previous year plus an additional 1.5%.
This date will now move to the 6 April each year to remove an anomaly which generates skewed pension growth and subsequently, larger pension tax payments.
Important advice for doctors now – take advice!
Patrick Convey (right), technical director at specialist financial planners Cavendish Medical, issued the following message to Independent Practitioner Today readers:
‘With these NHS developments and new pensions tax savings limits announced in the Budget, it’s important that doctors have full discussions with their adviser to assess if their own plans should be updated.
‘Last month, the second consultation for the McCloud remedy was also launched to discern how the Government plans to implement the Remedy, which is due to be in place by October.
‘There are therefore many elements to consider now as part of a full retirement plan.’
The McCloud Remedy ‘Part 2’ consultation will last for 12 weeks and finish on 6 June 2023.