The NHS pension flexibilities consultation has been published. What does it mean for those planning retirement options and will it be enough to repair the current retention (and recruitment) crisis?

Pensionable re-employment

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 section to enjoy the same facility as those in 2008 section and 2015 scheme.

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. Doctors can retain their current terms and conditions which is often not the case when they choose to ‘retire and return’.

The new plans give those age 55 and above, the choice to take up to 100 per cent of their pension benefits. However, there is a requirement for those choosing this partial retirement option to reduce their pensionable pay by at least 10 per cent.

Revisiting ‘Choice 2’

The consultation confirmed that members who moved their accrued 1995 section 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.

Valuations and inflation

From the 2022/23 tax year onwards, 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 consultation is due to be launched in Spring to discern how the government plans to implement the McCloud Remedy.

In the meantime, if these important changes affect you and you would like to discuss your options, our adviser team would be happy to discuss your position.