Can I take my NHS pension at 55 and still work? Your flexible retirement guide

As of recent rule changes, flexible retirement options within the NHS Pension Scheme have expanded significantly. Yes, you can I take my NHS pension at 55 and still work, but it requires following a process known as partial retirement.

Quick Summary

Taking your NHS pension at age 55 while continuing to work is possible through 'partial retirement', also known as drawdown. It requires employer agreement and a minimum 10% reduction in your pensionable pay for at least 12 months, without needing to leave your job.

Key Points

• Partial Retirement: Allows taking 20% to 100% of pension from age 55 without leaving a job, requiring a 10% pensionable pay reduction for 12 months.

• Retire and Return: Involves resigning, taking full pension after a 24-hour break, then potentially being rehired by the NHS.

• Actuarial Reduction: Taking pension before Normal Pension Age leads to a permanent reduction.

• No Abatement: Most members returning after retiring no longer have pension reduced based on post-retirement earnings.

• McCloud Ruling: If affected by the remedy, partial retirement choices can impact final benefit elections.

• Seek Guidance: Discuss options with HR and use NHSBSA resources for planning.

Understanding Flexible Retirement in the NHS

For many years, the NHS pension offered limited options for those wishing to wind down their careers gradually. Recent reforms have introduced greater flexibility, allowing members to access a portion of their pension benefits while remaining in employment. The primary method for this is 'partial retirement'.

What is Partial Retirement?

Partial retirement, or 'drawdown', allows eligible members of the NHS Pension Scheme to take a percentage of their pension benefits while continuing to work for the NHS. This process does not require a break in service, meaning you remain in your current role or a newly agreed position.

To be eligible for partial retirement, you must be aged 55 or over, have employer agreement, and commit to reducing your pensionable pay by at least 10% for a minimum of 12 months from your partial retirement date. You can draw down between 20% and 100% of your benefits in one or two payments and continue to build new benefits in the 2015 Scheme if you don't take 100%.

The 'Retire and Return' Alternative

If partial retirement doesn't suit your circumstances, a different option is 'retire and return'. This involves a clear break in your employment, allowing you to claim your full pension before re-joining the NHS. This requires you to resign, have at least a 24-hour break in service, and then return to work under a new contract. The previous '16-hour rule' for 1995 section members was removed from 1 April 2023. With retire and return, you receive your full pension immediately (potentially with an early retirement reduction) and are not subject to the 10% pay reduction. You also have the option to re-join the 2015 Scheme under your new contract.

Comparison of Flexible Retirement Options

{Link: NHS Employers https://www.nhsemployers.org/publications/using-flexible-retirement-support-retention} outlines a comparison of flexible retirement options.

How Taking Your Pension Early Affects Your Benefits

Accessing your pension before your Normal Pension Age (NPA) typically results in an actuarial reduction, as benefits are paid for a longer period. Your NPA varies depending on your scheme section (1995, 2008, or 2015 Scheme). The closer you are to your NPA, the smaller the reduction. Importantly, the earnings limit (abatement) for most members who return to work after retiring has been permanently removed.

The McCloud Ruling and Your Pension

If you were impacted by the McCloud ruling and are offered a choice of benefits for the remedy period, taking partial retirement can affect your final choice and potentially lead to overpayments. The NHSBSA provides tools to help model your options.

How to Begin the Process

Start by discussing your options with your employer's HR or pensions team to agree on new working arrangements if considering partial retirement. You will need to complete the necessary application forms, allowing plenty of time for discussions and paperwork. For more detailed information, consult the official guidance on the NHSBSA Member Hub.

A Final Word

Flexible retirement provides valuable options for NHS staff. Understanding these options, along with the financial implications of early access, helps in making an informed decision about transitioning into retirement.

Frequently Asked Questions

What is the minimum age to take my NHS pension and still work?

Generally, the minimum pension age for partial retirement is 55. Some 1995 section members who joined before April 6, 2006, may have a protected minimum age of 50 under specific conditions.

Can I take partial retirement more than once?

Yes, members can use partial retirement up to two times before fully retiring, each requiring employer agreement and a 10% pay reduction for 12 months.

What happens if I fail to maintain the 10% pay reduction?

If your pensionable pay exceeds 90% of your pre-partial retirement pay within the first 12 months, pension payments could pause until pay reduces.

Does overtime count towards my pensionable pay reduction?

No. Since April 1, 2024, overtime payments are non-pensionable for members who took partial retirement in the last 12 months, making it easier to work additional hours without breaching the 10% reduction.

How does 'retire and return' differ from 'partial retirement'?

Retire and return requires leaving employment and a 24-hour break before returning on a new contract, whereas partial retirement lets you stay in your job with an amended contract and no break.

Will my pension be reduced if I take it at 55?

Yes. Taking your pension before your Normal Pension Age will result in a permanent actuarial reduction based on how early you claim and your pension section rules.

Can I take my 1995 section pension and rejoin the scheme?

Yes, rule changes from April 1, 2023, allow members retiring with 1995 section benefits to return to work and build new benefits in the 2015 Scheme after a minimum 24-hour break.