Consultation outcome

NHS Pension Scheme: proposed amendments to continue the suspension of restrictions on return to work introduced by the Coronavirus Act 2020 (Section 45) – response to consultation

Updated 10 March 2022

Introduction and summary of proposals

A key component of the government’s response to the coronavirus pandemic has been measures to boost the available NHS workforce. Accordingly, section 45 of the Coronavirus Act 2020 suspends rules in the NHS Pension Scheme to allow retired and partially retired staff to return to work or increase their working commitments without having their pension benefits abated or suspended.

The emergence of the Omicron variant means that the NHS response to the coronavirus pandemic has lasted longer than was initially anticipated. Government has consistently kept under review the emergency measures which were introduced to help the NHS to deal with the pandemic. The suspension of the NHS Pension Scheme restrictions relating to retired staff returning to work will cease to have effect from 25 March 2022 when section 45 of the Coronavirus Act 2020 expires. However, the Department of Health and Social Care (DHSC) has listened to concerns from the NHS and has proposed that the suspension of the restrictions on return to work should continue until 31 October 2022.

DHSC considers that it is appropriate to continue the temporary amendments to the NHS Pension Scheme made via section 45 of the Coronavirus Act for a further period, to ensure that the NHS can continue to benefit from the capacity boost provided by retired and partially retired staff when responding to the pandemic. On this basis, DHSC consulted on proposals to continue the easement of the restrictions via temporary modifications to NHS Pension Scheme regulations. These proposed amendments would take effect from 25 March 2022, immediately following the expiry of section 45, and run to 31 October 2022.

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 which limit the amount that 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 per 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 Special Class Status (SCS) members, including mental health officers (MHO) 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.

Since 25 March 2020, these rules have been suspended by amendments to the NHS Pension Schemes made under section 45 of the Coronavirus Act 2020, one of the pieces of emergency legislation introduced to provide the government and the NHS with the tools required to deal with the coronavirus pandemic. This provision of the Coronavirus Act is time-limited and is due to expire on 24 March 2022.

It was anticipated that the pandemic would place increased pressure on the healthcare system, so it was important that the Coronavirus Act 2020 contained provisions to boost NHS workforce capacity. Section 45 of the Coronavirus Act 2020 suspends 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 is set to expire at midnight on 24 March 2022, meaning from 25 March the suspended NHS Pension Scheme rules will come back into force unless NHS Pension Scheme regulations are amended. In November 2021, notice was provided to NHS staff and employers that the temporary easements were due to expire. This notice period was intended to give staff and employers time to adjust to a return to business as usual arrangements. In response, NHS employers and trade union representatives expressed concerns that the easements are still required to allow staff to contribute additional capacity during the ongoing pandemic response.

Accordingly, DHSC recently consulted on proposals to continue these easements via temporary modifications to NHS Pension Scheme regulations.

Consultation process

The consultation ran from 15 February to 1 March 2022. A short consultation was considered to be appropriate given the nature of the proposals and ensures that the proposed changes to regulations can be made in time to take effect from 25 March 2022, subject to the consultation outcome.

Consultation questions

Respondents were invited to consider the following questions:

Do you agree or disagree that the temporary pension easements currently provided by section 45 of the Coronavirus Act should be continued beyond the planned expiry of the act from 25 March 2022?

Do you agree or disagree that the continuation of the easements until 31 October 2022 is a reasonable length of time?

Summary of responses

DHSC is grateful for all consultation responses, which were received from individuals and on behalf of organisations. Respondents had the option of responding to the consultation via an online survey, via post or via email.

969 responses were received from individuals via the online survey platform, and a further 11 were received from individuals via email.

Responses were received from the following 10 organisations:

• The British Medical Association
• The Cavendish Square Group
• The Chartered Society of Physiotherapists
• NHS Employers
• NHS Pension Scheme Advisory Board
• NHS Providers
• The Royal College of Midwives
• The Royal College of Nursing
• The Royal College of Psychiatrists
• The Royal College of Surgeons of England

Consultation responses

In summary, consultation respondents were almost universally supportive of continuing the easements. However, some respondents argued that the easements should remain suspended for a longer period than 31 October 2022, or that the relevant rules in the NHS Pension Schemes should be removed entirely.

Continuing the easements

96% of respondents to the online survey agreed that the easements should continue beyond 24 March 2022 (3% disagreed and 1% responded ‘don’t know’). This view was also shared by each of the organisations who responded to the consultation.

Of the minority of respondents that disagreed with the proposal, the reasons for disagreeing with the proposal were either because respondents believed that abatement should be suspended indefinitely or because they felt it unfair that some members of the NHS Pension Scheme hold SCS while others do not. Additionally, a minority of respondents cited capacity issues in the NHS workforce as a reason for disagreeing with the proposal to continue the easements.

DHSC is pleased to note the overwhelmingly positive support for the proposal to continue the easements in section 45 of the Coronavirus Act and will proceed with proposals to do this via temporary modifications to the NHS Pension Scheme regulations.

Duration of the continued easements

Fewer consultation respondents agreed that 31 October 2022 is a suitable end date for the continuation of the easements.

29% of respondents to the online survey agreed with the proposed duration of the continuation and 61% disagreed (10% responded ‘don’t know’). 64% of respondents to the online platform were nurses, many of whom may be NHS Pension Scheme members who had either retired with SCS or who are eligible to retire with SCS in the future.

The organisations who responded to the consultation represented a mixture of staff and employer interests. NHS Employers recognised that it’s difficult for employers to predict workforce needs from 1 November 2022, due to ongoing uncertainty regarding the potential emergence of new Coronavirus variants. Around a quarter of employers who provided feedback to NHS Employers agreed that 31 October was a suitable duration for continuation, while approximately half argued that the continuation should extend beyond this point. Many of those employers suggested 31 March 2023 as a suitable date to end the measures, on the basis that the easements are needed to support the elective recovery period following the end of the pandemic, particularly during winter.

NHS Employers argued that the cost of pension benefits in addition to a full-time salary for those normally affected by these rules should be considered against the costs of recruitment, particularly in specialist or hard to recruit areas, and training. It was also suggested that the 16-hour rule should be removed indefinitely to facilitate an immediate return to full-time employment for members of the 1995 section who wish to retire and return.

The Royal College of Nursing (RCN) agreed with the proposals to extend the easements beyond 24 March 2022. However, they argued that the easements should be continued until a point where staffing and workload issues are remedied, or that the relevant rules should be removed entirely. The RCN outlined that existing staff shortages are likely to be compounded by significant numbers of existing staff considering whether to leave employment via retirement, and that a further suspension or permanent removal of the rules would be a suitable mitigation.

The NHS Pension Scheme Advisory Board (SAB) agreed that the easements should be extended beyond 24 March 2022 in recognition of the significant workforce pressures which are expected to last beyond this point. Like other respondents, the SAB argued that the easements should be extended further beyond 31 October 2022. The SAB stressed that the Coronavirus pandemic is still expected to put the NHS under pressure beyond this point and that the end date for the easements should be kept under review.

The SAB and NHS Employers agreed with one another that there should be a review of any rules which restrict post-retirement working, with particular focus on how these rules interact with workforce priorities such as encouraging flexible retirement and retaining experienced members of staff within NHS organisations. The SAB highlighted that they remain fully supportive of the consideration of new flexible retirement options in the 1995 Section of the NHS Pension Scheme to support staff to work in the NHS for longer.

A number of respondents to the online survey platform stated that it would be helpful to see example materials of how different SCS staff may be affected by the planned reintroduction of abatement from 1 November 2022. The NHS Pension Scheme is committed to providing high quality information to members on the value of their pension benefits. The NHS Business Services Authority (NHSBSA), who administer the scheme, intend to write to all recent SCS retirees in advance of the proposed expiry of the easements in October 2022 to inform them of the amount of work they can perform before abatement applies.

Government response to consultation

Continuing the easements beyond 24 March 2022

DHSC is pleased to note that consultation respondents were overwhelmingly supportive of retaining the temporary easements beyond 24 March 2022. As set out in the initial consultation document, the ongoing pandemic response presents a clear rationale for continuing the easements in section 45 of the Coronavirus Act beyond 24 March 2022.

Therefore, DHSC intends to proceed with the proposals to continue the easements beyond March 2022, via temporary amendments to NHS Pension Scheme regulations.

Duration of the continued easements

DHSC notes the concerns expressed by respondents that 31 October 2022 may not be a sufficient length of time to retain the easements, and that a longer extension may be required. Respondents such as NHS Employers and the SAB argued that there should also be a further review of whether the 16-hour rule and SCS abatement should be permanently removed from the 1995 Section in order to allow retired staff to immediately return to work and increase their working commitments without having their pension benefits reduced or suspended.

As set out in the initial consultation document, there are good policy reasons for abatement applying to SCS members who return to work before age 60. 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. This is a generous benefit that is no longer available to new starters and younger staff, as it was withdrawn to new entrants from 6 March 1995 as part of the NHS Pension Scheme restructuring at that time.

SCS allows members to retire at 55 instead of 60, without the actuarial reduction to their pension which would apply to other members who claim their benefits early. However, under normal arrangements, SCS members who return to work between age 55 to 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. The following analysis was included in the initial consultation document but is presented again here as it evidences the amount that example SCS members can work before abatement applies. Many consultation respondents said that it would be helpful to see this type of analysis in order to allow them to plan for the eventual reintroduction of abatement.

Figure 1: approximate abatement ceiling for 3 example SCS members

Years of service	Current pension in payment	Full-time equivalent (FTE) salary upon reemployment	Approximate abatement ceiling
25	£12,000	£39,027	£26,300
30	£14,400	£39,027	£24,000
35	£16,800	£39,027	£21,600

Source: Government Actuary’s Department

The abatement ceiling limits the amount that returning SCS members can work between the age of 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 full-time equivalent (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 members 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.

In considering whether to continue these easements the government must assess whether the period of extension is proportionate to the initial aim of the easements. Section 45 of the Coronavirus Act recognised that the pandemic would place pressure on the NHS workforce, and that measures would be required to boost available workforce capacity. From the outset, DHSC has been clear that these easements were directly linked to the period of pandemic response.

Following on from the Omicron variant, the department believes that these specific easements should continue for a further 7 months as it provides certainty to staff and employers regarding work arrangements in the immediate future, while ensuring the easements remain temporary. The government will keep the impact of these easements under review.

DHSC notes the consultation respondents who argued that a longer extension would be more suitable, including a number who suggested a 12-month extension to 31 March 2023. In DHSC’s view, the changing nature of the pandemic response means that a 12-month extension would be inappropriate. However, the government will keep the impact of the continuation to 31 October 2022 under review and consider whether a further extension is appropriate.

The government is grateful for the contributions of retired and partially retired staff during the pandemic response period. The additional capacity they have provided has been vital in tackling the pandemic and assisting the vaccine rollout. DHSC continues to keep the impact of retire and return policies in the NHS Pension Scheme under review.

Supporting retire and return in the NHS

DHSC notes the comments from the SAB and NHS Employers that there should be a review of any rules which restrict post-retirement working. DHSC is committed to ensuring the NHS has the staff it needs, and it is supportive of retire and return for members of the NHS Pension Scheme. Returning to work for the NHS after taking NHS Pension Scheme benefits 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 and Improvement 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 manging 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 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.

Public sector equality duty

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

The government’s equality analysis for the Coronavirus Act 2020 is available – see Section 1: DHSC provisions of the Coronavirus Act 2020: the public sector equalities duty impact assessment.

Conclusion and next steps

DHSC is grateful for the responses received at consultation stage, which have helped test the proposals and provided valuable insight from a wide cross-section of the NHS Pension Scheme membership and interested stakeholders.

DHSC intends to proceed with the draft regulations as consulted on. The reforms set out in this consultation will apply from 25 March 2022 and run to 31 October 2022. These reforms will amend NHS Pension Scheme regulations to ensure a further continuation of the temporary easements previously provided by section 45 of the Coronavirus Act. The government will keep the impact of this continuation under review.

These provisions will be included in the same Statutory Instrument as the proposed changes to member contribution rates in the NHS Pension Scheme.