Staff in receipt of their NHS Pension Scheme benefits
It is important to note that all pension and re-employment income is subject to income tax, changes in pensionable pay may affect the level of NHS Pension Scheme contributions that employees pay.
More information is available on the NHS Business Services Authority (NHS BSA) website.
The COVID-19 bill will provide powers to suspend the 16-hour rule, which currently prevents staff who return to work after retirement from the 1995 NHS Pension Scheme from working more than 16 hours per week in the first four weeks after retirement. The bill also provides powers to suspend abatement for special class status holders in the 1995 scheme. It also suspends the requirement for staff in the 2008 Section and 2015 NHS Pension Scheme, to reduce their pensionable pay by 10 per cent if they elect to draw down a portion of their benefits and continue working.
These measures will allow skilled and experienced staff who have recently retired from the NHS to return to work, and will also allow retired staff who have already returned to work to increase their commitments if required, without having their pension benefits suspended.
Staff who retire from the 1995 Section and return to work are unable to re-join the NHS Pension Scheme, but employers must provide an alternative pension arrangement in line with auto-enrolment legislation. Staff in the 2008 Section or 2015 NHS Pension Scheme can re-join the scheme while in receipt of their benefits and build further pension. Such eligible staff will be auto-enrolled into the NHS Pension Scheme on their return to work but can opt out if they wish.
Impact of pension tax on staff increasing their hours and performing additional sessions
The government recognised that the tapered annual allowance has caused many doctors to turn down extra shifts for fear of high tax bills.
The Chancellor confirmed at the Budget on 11 March 2020 that both annual allowance taper thresholds will be increased by £90,000, removing anyone with income below £200,000. The measure will remove up to 98 per cent of consultants and up to 96 per cent of GPs from the taper altogether, based on their current NHS income. From 6 April 2020, staff can earn an additional £90,000 before reaching the new taper threshold. This tax measure applies to everyone, including senior managers and clinicians within the NHS. More information can be found on the Gov.uk website.
For the remainder of the 2019/2020 tax year, NHS clinicians can take advantage of a special scheme implemented by NHS England and NHS Improvement to preserve clinical capacity amid the increased pressure on services during the winter period. The scheme compensates NHS clinicians at retirement for the effect on their pensions of annual allowance tax charges incurred in 2019/2020.
The NHS Pension Scheme rightly provides generous retirement benefits for NHS staff. Where this means tax is incurred, then the ‘Scheme Pays’ facility provides a proportionate way to settle the tax charge without needing to pay cash up-front. Staff will still have built up valuable pension benefits after the Scheme Pays charge has been deducted. Further information on Scheme Pays can be found on the NHS BSA website.
Employers in the NHS are well placed to support doctors in understanding their tax position and how their NHS work can best serve their financial interests. Some NHS trusts already provide access to tailored information and expert advice, and the Department of Health and Social Care, NHS England and NHS Improvement and NHS Employers will work together to help employers engage with staff in managing the tax implications of their NHS work. It should be noted that NHS organisations cannot provide tailored financial advice, which should be accessed through an independent financial advisor. Examples of best practice can be found on the NHS Employers website.
Access to the NHS Pension Scheme for temporary staff
If staff hold a contract of employment with an NHS employer and are on payroll, they will be auto-enrolled into the NHSPS unless they choose to opt out. Staff employed through a third-party are not eligible to join the scheme.
Death in service provisions for members of the NHS Pension Scheme
Individuals that are actively contributing to the NHS Pension Scheme are entitled to death in membership benefits, including life assurance and family benefits. The scheme provides a lump sum and pension benefits to eligible dependants.
For individuals that have previously contributed to the scheme and accrued benefits but are no longer actively contributing, these benefits may no longer be payable or, depending upon the circumstances, a lower amount may be payable on death.
NHS Employers has produced a briefing that outlines the current death in pensionable membership provisions under the NHS Pension Scheme, and details the lump sum and family benefits that are payable on death to members from the 1995 Section, 2008 Section and the 2015 Scheme.
Access the pensions FAQs including information about staff returning to work, deferring a retirement decision and the impact on auto-enrolment.