New ‘staff retention’ options will be offered to doctors following the outcome of the Department of Health and Social Care’s consultation into NHS retirement flexibilities.

The consultation centred on improving partial retirement options and introducing pensionable re-employment. There are also new methods to address the problems of deemed high growth in the 1995 scheme because of the way the annual valuation method is linked to inflation.

Retire and rejoin

From April 2023 doctors will be able to retire, draw their NHS pension benefits and rejoin the 2015 scheme to accrue further benefits. Known as ‘retire and rejoin’, this will allow members of the 1995 scheme to enjoy the same facility as those in 2008 and 2015 sections.

This is a valid option for medics who have work commitments they continue to enjoy or further opportunities to pursue. There is no set limit to the pension benefits which can be accrued, as long as the member is under 75.
There is a minimum 24-hour break before rejoining but once completed, the member is free to work as many hours as the choose. The previous 16-hour limit for the first month after ‘retirement’ has been removed.

Partial retirement

From October 2023, doctors will be able to access partial retirement while retaining their current job role. The intention here is to delay the full retirement of key staff (and the loss of their skills base) while allowing them to enjoy pension benefits.

Partial retirement will mean doctors can retain their current terms and conditions which is often not the case when they choose to ‘retire and return’. Many report receiving a weaker contract when they come back.

The new plans give those age 55 and above, the choice to take between 20 and 100 per cent of their pension benefits in one or two drawdown payments.

However, there is a requirement for those choosing this partial retirement option to reduce their pensionable pay by at least 10 per cent. For many this demand seems unreasonable, particularly for consultants who work a set number of PAs. Those in receipt of Clinical Excellence Awards or Clinical Impact Awards will also find this difficult to navigate. The DHSC has promised new guidance to show how this might work in practice but it could potentially involve an agreement between the employer and consultant to make some PAs non-pensionable.

Revisiting ‘Choice 2’

The consultation concluded that members who moved their accrued 1995 scheme benefits into the 2008 section as part of the previous ‘Choice 2’ election will be offered the opportunity to change their decision as part of the McCloud Remedy. This is because it has become apparent that some members moved to the new section because of the lack of flexibility in the 1995 scheme at the time.

This will create an extra layer of complexity for calculations, even before we begin to unravel the figures generated for the seven years of the McCloud remedy period.

Valuations and inflation

From April 2023, the date that the 2015 pension scheme is revalued each year will be moved. On 1 April each year, the 2015 pension is revalued to keep in line with the cost of living, using the CPI rate from the previous year plus an additional 1.5 per cent. This date will now move to the 6 April each year to remove an anomaly which generates skewed pension growth and subsequently, larger pension tax payments.

McCloud Remedy

A further 12-week consultation has now been launched to discern how the government plans to implement the McCloud Remedy. To recap, this is the plan to alleviate the deemed age discrimination caused by moving some members to the 2015 scheme.

Affected members will be able to choose between remedial benefits from their new scheme or from their legacy scheme for their service during the remedy period which is between 1 April 2015 and 31 March 2022. The remedy is due to be implemented from 1 October 2023.

If you would like to discuss how these important changes affect you, please get in touch with our adviser team on 020 7636 7006.