NHS Pension Scheme: update on the continued suspension of abatement and the 16-hour rule

The 16-hour rule and some of the abatement rules that apply to NHS Pension Scheme members are currently suspended and were due to be re-introduced after 31 October 2022. Following concerns from employers and trade unions, the DHSC consulted on proposals to extend these provisions and the outcome has now been published.

Consultation outcome

DHSC has confirmed that these rules will continue to be suspended but will be kept under review.

The NHS Pension Scheme rules that will continue to be suspended until 31 March 2023 are:

• The 16-hour rule in the 1995 Section – pension payments will continue to be temporarily suspended if an employee works more than 16 hours per week in the first month after retirement. Further proposals will be made to permanently remove the 16-hour rule from 1 April 2023.
• Abatement in the 2008 Section and 2015 Scheme for those who have drawn down a portion of their pension – pension payments are reduced if an employee who has taken part of their pension earns more than 90% of their earnings before the draw down.

The NHS Pension Scheme rules that will continue to be suspended until 31 March 2025 are:

• Abatement for special class status holders in the 1995 Section – pension payments are reduced if an employee returns to work before age 60 and their earnings plus their pension exceed their pre-retirement earnings.

Next steps for employers

The extension to these temporary easements will continue to support retirees to return to the NHS workforce, at a time when staff absence due to Covid-19 is high, without their pension being affected.

Employers should communicate this information to employees that are likely to be affected, as this may impact the number of hours they decide to work after returning. Employers should focus communications to those that:

• are currently considering retirement
• have already returned to work.

We have published a range of resources to support you to have impactful conversations with your staff about how the NHS Pension Scheme can support them to work and retire flexibly.

Background - Our response

Employers were clear that the suspension of these rules has helped to encourage retirees to return to work to support the pandemic response, and that the NHS will continue to face significant workforce pressures beyond October 2022.

In our response to the consultation, we were therefore supportive of continuing the suspension of the abatement and 16-hour rules.