There have been several changes to the NHS Pension Scheme over the course of the pension’s existence, but more importantly, over the last 24 months.
Active members of any of the three NHS Pension Schemes should have received a letter confirming details of the next round of changes, and coupled with the recent Budget changes covered earlier in this newsletter. They provide a welcome respite for Senior Doctors & Consultants worrying about their pension affairs.
To explore some of the changes in more detail, please see below.
Revaluation Date
Firstly, it is important to note the change in the Revaluation Date.
There was a disparity between the CPI used for the in-service revaluation of the 2015 scheme pension and the CPI used to increase the opening value as part of the calculation to determine the Pension Input Amount (PIA). Recent higher inflation means that this mismatch has become more acute, leading to more members being potentially at risk of breaching their annual allowance.
A change is to be made in respect of 2022/23 onwards to align the CPI used in pension benefit revaluation with the CPI used for working out the pension growth for annual allowance tax calculations. This means that the pension growth calculation will only consider growth in pension benefits above inflation, which should reduce the number of annual allowance breaches.
To achieve this, the yearly in-service revaluation date will move from 1st April to 6th April.
Retire & Re-Join Pension
Further flexibilities have been announced where a member can now 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. This is already available to members of the 2008 Section or 2015 Scheme, and once the changes take effect on 1st April 2023, it will also be an option for members who have retired with 1995 Section benefits.
A member can also return to the NHS or increase their working commitments without having their pension payments reduced or stopped (known as ‘abatement’).
If a member holds Special Class or Mental Health Officer status and has taken their pension but decides to return to work before they reach age 60, the requirement for the post-retirement pay, plus pension, to be less than the pre-retirement earnings will be suspended until 31st March 2025.
Removing the 16-Hour Rule
If members decide to re-join the NHS, they can work as many hours as they choose.
Previously, members of the 1995 Section were limited to working 16 hours a week in the first month after retirement, to avoid affecting their pension payments. As long as the member has a break of 24 hours from their previous job, the member can move to a new employment contract and start building 2015 benefits immediately.
McCloud Remedy – Second Stage
The all-important McCloud Remedy is moving into its second stage, which will enable the NHS Pension to:
- Roll back pensionable service between 1st April 2015 to 31st March 2022 into the legacy scheme for members affected by the discrimination. This will mean members who were ‘unprotected’ and who had ‘tapered protection’ are effectively treated as if they didn’t move Schemes before 1st April 2022.
- Offer around 1.1 million affected members a retrospective choice of either legacy scheme or 2015 Scheme benefits for their pensionable service between 1st April 2015 and 31st March 2022.
- Offer an immediate choice to members who have already received benefits and the relatives of those members who died during the remedy period.
- Provide a choice on retirement, also known as a deferred choice election, of either legacy scheme or 2015 Scheme benefits for their pensionable service between 1st April 2015 and 31st March 2022.
- Correct any overpayment or underpayment of pension benefits or member contributions already paid because of either rollback or a member’s choice.
- Manage the consequences of the rollback of pensionable service.
- Facilitate the payment of appropriate compensation to address financial losses arising from the discrimination or implementation of the remedy.
Reminders
- The ‘Super’ Annual Allowance Statement is due to be issued in October 2023.
- The ‘Super’ statement will show members Pension Input Amounts (PIAs) revert from the 2015 Scheme back to either the 1995 or the 2008 Scheme, removing all PIAs from the 2015 Scheme between 2015 and 2022.
- The change will only happen to those who were a member of either the 1995 or 2008 Scheme prior to 2015 and a member of the 2015 Scheme between 2015 and 2022.
If you have any questions on the content in this article, please contact your usual BHP Healthcare contact.
