Consultation outcome

NHS Pension Scheme: proposed amendments to continue the suspension of restrictions on return to work

Updated 6 October 2022

Introduction

A key component of the government’s response to the coronavirus (COVID-19) pandemic has been measures to boost the available NHS workforce. As part of this, rules in the NHS Pension Scheme have been suspended since March 2020 to allow retired and partially retired staff to return to work or increase their working commitments without having their pension benefits suspended or abated. From 25 March 2020 to 25 March 2022 these easements were provided by section 45 of the Coronavirus Act 2020. From 25 March 2022 to 31 October 2022 the easements have been continued via temporary modifications to NHS Pension Scheme regulations made by Part 3 of the National Health Service Pension Schemes (Member Contributions etc.) (Amendment) Regulations 2022 (‘the 2022 Regulations’).

The continued need for NHS staff who contract COVID-19 to isolate and miss work means that staff sickness absence rates are currently higher than pre-pandemic levels. This has a negative impact on NHS capacity at a time when demand for services is high. It is possible that sickness absence rates due to COVID-19 will increase further in the coming winter months, due to the respiratory nature of the virus. On this basis, the Department of Health and Social Care (DHSC) is of the view that the suspension of the restrictions on return to work should continue to 31 March 2023.

DHSC considers that it is appropriate to continue the temporary modifications to the NHS Pension Schemes to ensure the NHS can continue to benefit from the capacity boost provided by retired and partially retired staff when responding to the pandemic.

The consultation sets out proposals to continue the easement of the restrictions via temporary modifications to NHS Pension Scheme regulations. These changes would amend the existing expiry date of the easements in the 2022 regulations from 31 October 2022 to 31 March 2023.

However, DHSC believes that there remains a strong rationale for the abatement of pension benefits for Special Class Status (SCS) members in receipt of an unreduced pension who return to work between age 55 and 60 to continue in normal circumstances. The suspension of SCS abatement due to the demands of the pandemic is kept under strict review and there are no plans for it to be permanently removed.

Consultation process

DHSC welcomes views on the proposals set out in this document to amend the 2022 regulations to extend the easements to NHS Pension Scheme regulations by way of temporary modification.

Consultation questions

Respondents are invited to consider the following questions:

Question 1

Do you agree or disagree that the temporary pension easements should continue beyond the planned expiry on 31 October 2022?

Question 2

Do you agree or disagree that the continuation of the easements until 31 March 2023 is a reasonable length of time?

How to respond

Comments on the proposals and draft legislation can be submitted online.

By email to:

nhspsconsultations@dhsc.gov.uk

By post:

NHS Pensions Policy Team
Department of Health and Social Care
Area 2NE Quarry House
Quarry Hill
Leeds
LS2 7UE

The consultation will close at 11.45pm on 12 September 2022.

Background

Returning to NHS service after retirement

The NHS Pension Scheme is designed to offer significant value in retirement to people who have chosen to dedicate part or all of their careers to serving the public through the NHS. Backed by the Exchequer, the NHS Pension Scheme offers the security of guaranteed income in every year of retirement for all its members, on some of the most generous terms available from a pension scheme, in recognition of their service to the NHS and the country.

Eligible NHS staff will be active members of one of the 2 existing schemes. The final salary defined benefit scheme – or ‘legacy scheme’ – is made up of the 1995 and 2008 sections (set out in the National Health Service Pension Scheme Regulations 1995 and the National Health Service Pension Scheme Regulations 2008) and is now closed to new members. All new staff will join the 2015 scheme (set out in the National Health Service Pension Scheme Regulations 2015), a career average revalued earnings (CARE) scheme that provides benefits based on average earnings over a member’s career.

Returning to work for the NHS after taking NHS Pension Scheme benefits (known as ‘retire and return’) is an option available to NHS Pension Scheme members. The aims of retire and return are to:

• enable the NHS to retain the skills and knowledge of experienced staff, which is necessary to deliver safe patient care
• help to support the health and wellbeing of older staff as they approach retirement and wish to continue working
• ensure that overall workforce costs are managed in line with budgets

NHS England is working with the NHS Staff Council, a partnership of NHS trade unions and NHS Employers, to create a range of tools and support for organisations to embed flexible working. This includes toolkits aimed at line managers and individuals to support flexible working requests. New guidance for HR managers is being developed on retire and return.

In addition, following a national collective agreement to include the right to flexible working from day one within the NHS Terms and Conditions of Service Handbook, a programme is also underway to support organisations to understand the benefits for staff and patients of flexible working.

Building on the work carried out at the start of the pandemic to bring back former healthcare professionals, a new NHS Reserve programme is being rolled out across England. Reservists are fully trained supplementary NHS staff who are committed to a number of days of service each year. Hospitals will be able to draw on the reserve programme to mobilise a broad range of staff, from doctors to IT experts, at times of high demand or for specific programmes like vaccination drives, ensuring the NHS has additional capacity when it needs it most.

For most staff, the NHS Pension Scheme does not place any limits on the amount that staff can work should they return after claiming their benefits. However, there are 3 rules across the schemes that limit the amount some retired staff can work in specific circumstances:

1. The 16-hour rule: this rule requires staff who retire and return from the 1995 section to work 16 hours a week (2 days) or less in the first month after retirement. Where staff work more than this limit, their pension benefits are temporarily suspended until their working commitments are reduced.
2. Abatement of SCS members, including mental health officers who are eligible to retire from the 1995 section at age 55 instead of 60 without an actuarial reduction in their pension: abatement applies where staff return to work before age 60 and their pension plus salary exceeds their pre-retirement income.
3. Abatement of 2008 section and 2015 scheme members who draw down a portion of their benefits and continue working: abatement requires them to reduce their pensionable pay by 10% upon each election to draw down benefits.

Retire and return easements

Since 25 March 2020, these rules have been suspended via amendments to the NHS Pension Schemes. From 25 March 2020 to 25 March 2022, the easements were provided by Section 45 of the Coronavirus Act, one of the pieces of emergency legislation introduced to provide the government and the NHS with the tools required to deal with the COVID-19 pandemic.

It was anticipated that the pandemic would place increased pressure on the healthcare system, so it was important that the Coronavirus Act contained provisions to boost NHS workforce capacity. Section 45 of the Coronavirus Act suspended rules in the NHS Pension Scheme to help retired and partially retired staff to return to work or increase their working commitments.

The Coronavirus Act expired at the end of 24 March 2022. However, at that time DHSC listened to concerns from staff and employers that a continuation of the easements was required to help the NHS deal with the ongoing Omicron variant. On this basis, DHSC continued the retire and return easements via temporary modifications to NHS Pension Scheme regulations made by Part 3 of the 2022 regulations which run to 31 October 2022.

However, there are further concerns that the continued presence of COVID-19 is causing sickness absence rates of NHS staff which are consistently higher than pre-pandemic levels. Therefore, there is a case for continuing the temporary easements during winter in an attempt to mitigate the impact of sickness absences.

Abatement in the NHS Pension Scheme

The normal pension age (NPA) for members of the 1995 section is 60. However, some members are eligible to retire earlier if they hold SCS. SCS is a preserved right awarded to certain professions in the 1995 section, which, subject to qualifying criteria being met, allows a member to retire at 55 instead of 60 without an actuarial reduction in benefits that would normally apply when claiming benefits early. It was withdrawn for new entrants from 6 March 1995 as part of the NHS Pension Scheme restructuring at that time.

In order to qualify for SCS, a member must:

• have been in pensionable employment as a nurse, physiotherapist, midwife or health visitor on or before 6 March 1995
• not had a break in pensionable employment of 5 years or more
• have spent the last 5 years of their pensionable employment prior to retirement as a nurse, physiotherapist, midwife or health visitor

SCS allows members to retire at 55 instead of 60 without the actuarial reduction to their pension that would apply to other members who claim their benefits early. However, under normal arrangements, SCS members who return to work between age 55 and 60 are subject to abatement. This means their pension plus salary cannot exceed their pre-retirement income, and their pension is reduced if it does.

Abatement ceases to apply at age 60. For members with long careers, the abatement ceiling typically prevents them from working more than half-time in the week should they return to work before age 60. However, where abatement applies, even staff with long careers can perform substantial amounts of work.

Figure 1: approximate abatement ceiling for 3 example SCS nurses

Years of service	Average current pension in payment	Full-time equivalent (FTE) salary upon re-employment	Previous FTE pensionable pay uplifted with CPI	Abatement ceiling
25	£11,965	£39,027	£38,287	£26,322
30	£14,391	£39,027	£38,376	£23,985
35	£16,789	£39,027	£38,376	£21,586

Source: Government Actuary’s Department

The abatement ceiling limits the amount that returning SCS members can work between 55 and 60 when in receipt of pension benefits. There have been concerns from stakeholders that the eventual reintroduction of abatement would force returning SCS members to retire. This is not the case, as it is still possible for SCS members to perform significant amounts of work without exceeding their abatement ceiling, even for members with long careers.

The below graph sets out the proportion of FTE that the 3 example SCS members could work after claiming their benefits without exceeding their respective abatement ceilings.

Figure 2: abatement ceilings for 3 example SCS nurses as a proportion of FTE

Source: Government Actuary’s Department

The above graph shows the average pension size for 3 example SCS nurses with 25, 30 and 35 years of pension membership at retirement. These members will, on average, accrue annual pensions of £12,000, £14,400 and £16,800 respectively, payable at age 55. The graph also shows the percentage of FTE that each example member could work if they returned to work after retirement while in receipt of pension benefits. All members can work at least half-time when in receipt of benefits before abatement applies.

In the interests of fairness to all scheme members, it is right that abatement applies to SCS members under normal circumstances. Members who qualify for SCS are a closed cohort who are eligible for a valuable benefit that has not been available to new staff since 6 March 1995, even for those in the same professions. SCS allows members to retire 5 years earlier than the NPA, without an actuarial reduction. SCS members do not pay additional contributions for this benefit.

Therefore, abatement limits the ability of SCS members to retire early on an unreduced pension and return to work on a full salary. This ensures fairness to all scheme members and protects the public purse from the impact of staff continuing to work full time while in receipt of generous pension benefits.

However, the response to the COVID-19 pandemic has placed unprecedented pressure on the NHS workforce. A key component of the response to the pandemic has been to encourage retired and partially retired staff to return to work or increase their working commitments. Suspending SCS abatement has been an important means of generating extra workforce capacity from partially retired staff.

The government is grateful for the contribution of retired and partially retired staff during the pandemic response period. The additional capacity has been vital in tackling the pandemic and assisting the vaccine roll-out. Whilst pressure on the NHS from COVID-19 patients is easing, due to the success of the vaccine, rates of sickness absence amongst NHS staff remain higher than pre-pandemic levels. It is therefore appropriate to consider whether the temporary easements should be extended for a further period.

Proposed amendments to NHS Pension Scheme regulations

DHSC has kept the impact of the temporary easement of NHS Pension Scheme restrictions relating to retired staff returning to work under review, and considers it proportionate to the ongoing pandemic response to continue the easements for a further period to 31 March 2023.

An extension would recognise the high rates of staff sickness absence due to COVID-19, and the requirement for NHS staff to take time off work if they contract the virus in order to limit transmission. In July 2022, sickness absence rates were 6.1%, which is 1.9% higher than in July 2019, with the increase caused fully by COVID-19 absences. It is reasonable to expect that this trend of increased sickness absence compared to pre-pandemic levels will at least continue or worsen during the winter months, when the respiratory nature of COVID-19 means that infection rates are likely to increase.

A similar trend of sickness absence was experienced last winter, especially during a period from mid-December to early-February when absence rates were consistently between 2% and 4.4% higher than corresponding pre-pandemic levels in 2019 and early 2020.

We are proposing to amend regulation 9 of the 2022 regulations (expiry of the modifications of restrictions on return to work) to extend the application of the easements to NHS Pension Scheme regulations until 31 March 2023. The amendment would be made by way of further NHS Pension Scheme regulations before the temporary modifications expire at the end of 31 October 2022.

The amendment to regulation 9 of the 2022 regulations would continue the temporary suspension of:

• the 16-hour rule in the 1995 section
• abatement of SCS members who retire and return to work between age 55 and 60 in the 1995 section
• abatement of draw-down members who claim a portion of their benefits and continue working in the 2008 section and 2015 scheme

A further suspension until 31 March 2023 ensures that the NHS workforce continues to benefit from increased capacity from retired and partially retired staff during a period when staff sickness absence rates are likely to increase. However, a temporary suspension also ensures the easements remain linked to the pandemic response period only and expire at the correct time once the need for emergency provisions has ended.

In fairness to all scheme members and the public purse, it is right that abatement applies under normal circumstances to restrict the already generous benefits provided to a closed cohort of staff.

DHSC recognises that work/life balance and flexibility around retirement options are key concerns for older staff. NHS England have launched an initiative focused on employers making flexible employment offers to late career staff. While DHSC keeps the ways in which pension scheme design can support this under review, a major element of the campaign is leveraging the scheme to support retention by promoting to:

• staff the value of continuing to build pension
• employers the value of using existing flexibility around working patterns and retirement

These include options for partial retirement and pensionable re-employment in the 2008 section and 2015 scheme.

DHSC is proposing to extend the temporary retire and return easements for a further period to 31 March 2023. These measures were first introduced to help the NHS deal with peak periods of the pandemic response. However, we recognise that the elective recovery period, which is not directly linked to the immediate pandemic response, is placing continued pressure on NHS services and workforce capacity.

DHSC is keeping the impact of the NHS Pension Scheme on NHS workforce needs and will assess what permanent measures may be appropriate to provide certainty of support to the workforce.

Public sector equality duty

The proposed amendments to NHS Pension Scheme regulations seek to continue easements which were previously provided by section 45 of the Coronavirus Act 2020. Therefore, DHSC’s equality analysis remains consistent with the initial analysis performed at the introduction of the Coronavirus Act.

View the government’s equality analysis for the Coronavirus Act 2020.

Conclusion and next steps

Subject to the findings of this consultation, DHSC proposes to lay a statutory instrument, which takes effect from 1 November 2022, to ensure a continuation of the temporary easements to 31 March 2023.

Data protection

We manage the information you provide in response to this consultation in accordance with DHSC’s personal information charter.

Any information received, including personal information, may be published or disclosed in accordance with the access to information regimes (primarily the Freedom of Information Act 2000 (FOIA), the Data Protection Act 2018 (DPA 2018) and the Environmental Information Regulations 2004.

DHSC will process your personal data in accordance with the DPA 2018 and, in most circumstances, this will mean that your personal data will not be disclosed to third parties.

Privacy notice

This consultation sets out proposals to continue the temporary NHS Pension Scheme ‘retire and return’ easements currently provided by Part 3 of the National Health Service Pension Schemes (Member Contributions etc.) (Amendment) Regulations 2022 until 31 March 2023.

This will allow retired and partially retired staff to continue their return to work or increase their working commitments during the ongoing pandemic response.

As part of the consultation process, you are invited to complete an online survey to provide your views on the proposals.

Data controller

DHSC is the data controller.

What personal data we collect

If you respond via email, we will collect your email address, but we will only contact you in relation to your consultation response.

If volunteered by you during the online survey, we will also collect data on:

• whether you are responding as an individual or on behalf of an organisation
• (if you are responding as an individual) whether you work in the NHS and which NHS role you perform
• (if you are responding on behalf of an organisation) which sector your organisation is in
• your email address

No other personal information will be collected from respondents.

How we use your data (purposes)

The consultation sets out proposals to extend ‘retire and return’ easements in the NHS Pension Scheme. It is therefore useful to DHSC to understand whether you are NHS staff and what roles you perform. The information provided on whether you work in the NHS will be used to assess the suitability of the proposals in the consultation.

However, no further personal information is collected.

Legal basis for processing personal data

Under Article 6 of the United Kingdom General Data Protection Regulation (UK GDPR) the lawful basis we rely on for processing this information is:

• (e) Necessary task in the public interest or controller’s official authority

Data processors and other recipients of personal data

All responses to the consultation will be seen by SurveyOptic who are responsible for hosting and running the online survey on behalf of DHSC.

International data transfers and storage locations

Storage of data by DHSC is provided via secure computing infrastructure on servers located in the European Economic Area (EEA). Our platforms are subject to extensive security protections and encryption measures.

Storage of data by SurveyOptic – our online survey platform – is provided via secure servers located in the UK.

Retention and disposal policy

DHSC will only retain your personal data for as long as either:

• it is needed for the purposes of the consultation
• the law requires us to

This means that personal data will be held by DHSC for one year.

SurveyOptic will securely erase the data held on their system 5 years after the consultation’s online survey closes, or when instructed to do so by DHSC if the data has served its intended purpose (whichever happens earlier).

Data retention will be reviewed on an annual basis. Anonymised data will be kept indefinitely.

How we keep your data secure

DHSC use appropriate technical, organisational and administrative security measures to protect any information we hold in our records from loss, misuse, unauthorised access, disclosure, alteration and destruction. We have written procedures and policies, which are regularly audited and reviewed at a senior level.

SurveyOptic is Cyber Essentials certified.

Your rights as a data subject

By law, you have rights as a data subject. Your rights under the GDPR and the DPA 2018 apply.

These rights are:

• the right to get copies of information – individuals have the right to ask for a copy of any information about them that is used
• the right to get information corrected – individuals have the right to ask for any information held about them that they think is inaccurate, to be corrected
• the right to limit how the information is used – individuals have the right to ask for any of the information held about them to be restricted, for example, if they think inaccurate information is being used
• the right to object to the information being used – individuals can ask for any information held about them to not be used. However, this is not an absolute right, and continued use of the information may be necessary, with individuals being advised if this is the case
• the right to get information deleted – this is not an absolute right, and continued use of the information may be necessary, with individuals being advised if this is the case

Comments or complaints

Anyone unhappy or wishing to complain about how personal data is used as part of this programme, should contact data_protection@dhsc.gov.uk in the first instance or write to:

Data Protection Officer
1st Floor North
39 Victoria Street
London
SW1H 0EU

Anyone who is still not satisfied can complain to the Information Commissioner’s Office. Their postal address is:

Information Commissioner's Office
Wycliffe House
Water Lane
Wilmslow
Cheshire
SK9 5AF

Automated decision making or profiling

No decision will be made about individuals solely based on automated decision making (where a decision is taken about them using an electronic system without human involvement) which has a significant impact on them.

Changes to this policy

This privacy notice is kept under regular review. This privacy notice was last updated on 15 February 2022.