Flexible retirement

Yusuf is a registered mental health nurse and leads a team providing mental health support for patients at home and in clinics.  He has line management responsibility for the members of his team including acting as a mentor, preceptor and supervisor to students and junior staff.  In addition to managing the care of his own patients, he is responsible for the quality of care provided by his team and provides guidance advice and assistance on their assessments and referrals. He is often asked to attend and chair meetings and deputise for his senior colleagues.  

Why have they decided to retire flexibly?  

In the lead up to his full retirement, Yusuf is keen to move to a less pressured and demanding role and to achieve a better work life balance. He would like to focus more time on providing more hands-on care for his patients and less time on line management and paperwork.  He is keen to ensure the drop in responsibility does not affect his final salary pension and the scheme has the flexibility to protect his final salary at the point of stepping down.   

What are the benefits for the employer? 

Supporting Yusuf to step down has improved staff health and wellbeing and created promotion opportunities for others.  

Zaria is a midwife and provides supervision, care and advice to women from conception, through pregnancy, labour, birth and the post-partum period, both in the hospital and at the patient’s home.  

Why have they decided to retire flexibly?  

Zaria is considering her retirement options and is looking at winding down and reducing her hours in the lead up to full retirement. Zaria would like to reduce her working hours as her partner has recently retired, and she would like to spend more time with them and travel the UK in their new motorhome. She is grateful for the flexibilities the NHS Pension Scheme offers and understands that she can still continue working on reduced hours without negatively affecting her final salary pension, as those benefits are based on whole-time equivalent pay.  

What are the benefits for the employer? 

By assisting Zaria to wind down, the trust has supported succession planning by retaining valuable skills and experience which can be passed on to other staff. Retaining Zaria has also reduced the time and costs of recruitment and training. 

Mark is a district nurse and does quite a lot of travelling in his job. As well as providing direct patient care, Mark has a teaching and support role, working with patients to enable them to care for themselves or with family members teaching them how to give care to their relatives. Mark is also accountable for his own patient caseloads. 

Why have they decided to retire flexibly?  

In Mark’s circumstances, if he chooses to take draw down, he could pay off his mortgage earlier. After considering all of his options, Mark decides to apply to draw down 50 per cent of his benefits.

Mark’s retirement benefits will be actuarially reduced because they are being paid earlier than his normal retirement age. Mark can choose to draw down a minimum of 20 per cent up, to a maximum of 80 per cent, and can choose to draw down twice before full retirement.

However, to continue to be eligible for pension benefits under this facility, Mark must ensure his earnings remain reduced by 10 per cent for a minimum of a year following his application. Otherwise, he will cease to be entitled to the pension benefits taken. Thanks to the draw down facility, Mark has chosen this option and is now living life to the full and enjoying his improved lifestyle.

What are the benefits for the employer? 

Supporting Mark to draw down has improved his health and wellbeing and work life balance, increasing productivity at work.  

Kamal leads on the estates engineering and maintenance functions whilst leading and developing the whole estates team.  

Why have they decided to retire flexibly? 

Kamal wants to continue to develop professionally and mentor his junior staff. He works in a busy hospital and has many friends and colleagues with whom he shares both a professional relationship and a great social life. Kamal knows he can retire but chooses to continue to be in the NHS Pension Scheme. Kamal can continue be in the pension scheme until age 75. Kamal plans to retire at age 69, as at that point his finances will be in good shape, and he can afford to retire. Kamal's 2008 pension will be uplifted because he is retiring later than the normal retirement age for the 2008 section of the scheme, which is 65. The pension he has built up in the 2015 Scheme will also be paid after the normal retirement age for the 2015 Scheme (state pension age), and will therefore also be uplifted.  Kamal is happy to be able to continue contributing to the Scheme, building a bigger pension and also getting the benefit of an uplift to his pension upon his retirement. 

What are the benefits for the employer? 

Supporting Kamal with late retirement has enabled to trust to retain a highly valued, skilled member of staff who will pass their knowledge on to other members of staff, supporting succession planning.

Susan is responsible for the planning, delivery and implementation of a new policy or service in the trust. She manages each step of this including planning, budgets, and risk assessment. 

Why have they decided to retire flexibly? 

After some health problems, Susan wants to have more time to spend with her family and friends, as well as to pick up hobbies she has not previously had time for. Susan decided to retire from her role and return to the same role but on a part time basis of 2.5 days a week.  

What are the benefits for the employer? 

By supporting Susan to retire and return, the trust has kept a valuable member of staff who will pass knowledge on to others.  

The following flexible retirement options are available to your staff depending on which part of the NHS Pension Scheme they have benefits in: 

1995 section – step down, wind down, retire and return  

2008 section – step down, wind down, retire and return, draw down, late retirement enhancement 

2015 scheme – step down, wind down, retire and return, draw down, late retirement enhancement, early retirement reduction buy out  

Members can find out which section or scheme they are in through their Total Reward Statement or Annual Benefit Statement. 

Options available

Step down  

Employees can ‘step down’ to a different role, for example to reduce their level of responsibility whilst remaining in NHS employment. This supports the organisation to retain the individual’s skills and experience whilst also supporting the employee on their approach to retirement.  

Some members opting to step down may be eligible to have their higher level of pensionable pay protected, which might mean that the member’s benefits are not affected.  

Wind down  

Staff can ‘wind down’ to retirement by remaining in their current post but reducing the number of hours or days they work. As pensions for part-time staff are calculated on the whole-time equivalent salary and not the actual salary, the pension should not be reduced. However, staff will need to consider the impact this may have on the length of their membership, as this option reduces the speed at which members build up pensionable years. In the 2015 Scheme, any arrangement that reduces gross pensionable earnings will have a negative impact on the pension built up in that year.  

This option may be used where the organisation wishes to retain the particular experience and skills with the team, but the individual wishes to reduce their hours as they approach retirement. This may support the member of staff to remain in work for a longer period of time before retirement. 

Retire and return to NHS employment  

Staff who have reached the minimum pension age can choose to retire, claim their pension benefits and then return to NHS employment. 

Staff who retire from the 1995 section may return to NHS employment, but they cannot continue to contribute to the NHS Pension Scheme. However, these staff may be eligible to contribute to an alternative scheme under automatic enrolment.  

Staff who retire from the 2008 section or 2015 scheme may return to NHS employment and be able to continue contributing to the NHS Pension Scheme. 

This means that individuals can retire and claim their benefits but return to NHS employment and continue working past their retirement age. 

Draw down  

Members can take part of their pension benefits and continue in NHS employment. Members can take between 20 per cent and 80 per cent of their pension benefits and continue to build up future membership in the scheme. Members can draw down on up to two occasions before retiring completely. However, if the benefits are paid before age 65, the benefits would be reduced as they are being paid early. 

In addition, if members are over age 55 and their pay is reduced by at least 10 per cent, they can also partially retire and take some pension benefits. The member’s pensionable pay must be reduced for at least a year, or the member will cease to be eligible for the pension they have drawn down. 

Draw down can support staff to continue working whilst benefitting from being able to partially draw down their pension benefits and supplement their income ahead of retirement. 

Late retirement enhancement 

If a member chooses to retire later than their normal pension age, their pension benefits will be increased by the application of late retirement factors. 

The member can benefit from working longer to achieve an increase in pension benefits when they come to draw their pension. 

Early retirement reduction buy out (ERRBO) 

Members or employers can pay additional contributions to buy out, or reduce, the actuarial reduction that would be applied to their pension were they to retire before their normal pension age. After joining the 2015 scheme, there will be a three-month window to take out an agreement with a buy-out period beginning with the member’s first day of pensionable service. 

Alternatively, a member will have three months after the beginning of each subsequent scheme year to take out an agreement, with the buy-out period and contributions backdated to the beginning of that scheme year.  

Please note that ERRBO is different to the existing provision for early retirement in ‘the interests of efficiency for the service’.  

Looking to the future 

With a greater number of staff working into their later 60s, employers need to consider what steps can be taken to ensure motivation, engagement and productivity of the whole workforce. It is also important that consideration is given to the impact of an ageing workforce in business and workforce planning and consider how these flexibilities can support your organisation.