Consultation outcome

NHS Pension Scheme: proposed amendments to continue the suspension of restrictions on return to work introduced by the Coronavirus Act 2020 (section 45) – consultation document

Updated 10 March 2022

This was published under the 2019 to 2022 Johnson Conservative government

Applies to England and Wales

Introduction

A key component of the government’s response to the coronavirus (COVID-19) pandemic has been measures to boost the available NHS workforce. Accordingly, section 45 of the Coronavirus Act 2020 suspends rules in the NHS Pension Scheme to allow retired and partially retired staff to return to work or increase their working commitments without having their pension benefits suspended.

The emergence of the Omicron variant means that the NHS response to the coronavirus pandemic has lasted longer than was initially anticipated. The government has consistently kept under review the emergency measures that were introduced to help the NHS to deal with the pandemic.

The suspension of the NHS Pension Scheme restrictions relating to retired staff returning to work will cease to have effect from 25 March 2022 when section 45 of the Coronavirus Act 2020 expires. However, the Department of Health and Social Care (DHSC) has listened to concerns from the NHS and is of the view that the suspension of the restrictions on return to work should continue until 31 October 2022.

DHSC considers that it is appropriate to continue the temporary amendments to the NHS Pension Schemes, made via section 45 of the Coronavirus Act, for a further period to ensure the NHS can continue to benefit from the capacity boost provided by retired and partially retired staff when responding to the pandemic.

The consultation sets out proposals to continue the easement of the restrictions via temporary modifications to the NHS Pension Scheme regulations. These changes would take effect from 25 March 2022 – to ensure a seamless transition from the expiry of section 45 – and run until 31 October 2022. Section 45 of the Coronavirus Act 2020 expires from 25 March 2022. It would be possible to extend section 45 by way of regulations (subject to the affirmative resolution procedure) made under section 90 of the Coronavirus Act.

However, the Coronavirus Act introduced a package of temporary measures to enable government to respond to the emergency situation and DHSC considers that it would be disproportionate to extend the act when there is alternative legislative means to suspend the restrictions to the NHS Pension Scheme.

Therefore, the intention is to make these changes via amendments to NHS Pension Scheme legislation, subject to the usual parliamentary procedure and statutory consultation requirements in order to support the planned expiry of the Coronavirus Act in March 2022.

If required and where possible, government is seeking to extend the supportive powers in the Coronavirus Act via alternative legislation.

Background

Returning to NHS service after retirement

The NHS Pension Scheme is designed to offer significant value in retirement to people who have chosen to dedicate part or all of their careers to serving the public through the NHS. Backed by the Exchequer, the NHS Pension Scheme offers the security of guaranteed income in every year of retirement for all its members, on some of the most generous terms available from a pension scheme, in recognition of their service to the NHS and the country.

Eligible NHS staff will be active members of one of the 2 existing schemes. The final salary defined benefit scheme – or ‘legacy scheme’ – is made up of the 1995 and 2008 sections, and is now closed to new members. All new staff will join the 2015 scheme, a career average revalued earnings (CARE) scheme that provides benefits based on average earnings over a member’s career.

Returning to work for the NHS after taking NHS Pension Scheme benefits (known as ‘retire and return’) is an option available to NHS Pension Scheme members. The aims of retire and return are to:

• enable the NHS to retain the skills and knowledge of experienced staff, which is necessary to deliver safe patient care
• help to support the health and wellbeing of older staff as they approach retirement and wish to continue working
• ensure that overall workforce costs are managed in line with budgets

NHS England and Improvement is working with the NHS Staff Council, a partnership of NHS trade unions and NHS Employers, to create a range of tools and support for organisations to embed flexible working. This includes toolkits aimed at line managers and individuals to support manging flexible working requests. New guidance for HR managers is being developed on retire and return.

In addition, following a national collective agreement to include the right to flexible working from day one within the NHS Terms and Conditions of Service Handbook, a programme is also underway to support organisations to understand the benefits for staff and patients of flexible working.

Building on the work carried out at the start of the pandemic to bring back former healthcare professionals, a new NHS Reserve programme is being rolled out across England. Reservists are fully trained supplementary NHS staff who are committed to a number of days of service each year. Hospitals will be able to draw on the reserve programme to mobilise a broad range of staff, from doctors to IT experts, at times of high demand or for specific programmes like vaccination drives, ensuring the NHS has additional capacity when it needs it most.

For most staff, the NHS Pension Scheme does not place any limits on the amount that staff can work should they return after claiming their benefits. However, there are 3 rules across the schemes that limit the amount some retired staff can work in specific circumstances:

1. The 16-hour rule: this rule requires staff who retire and return from the 1995 section to work 16 hours a week (2 days) or less in the first month after retirement. Where staff work more than this limit, their pension benefits are temporarily suspended until their working commitments are reduced.
2. Abatement of Special Class Status (SCS) members, including mental health officers who are eligible to retire from the 1995 section at age 55 instead of 60 without an actuarial reduction in their pension: abatement applies where staff return to work before age 60 and their pension plus salary exceeds their pre-retirement income.
3. Abatement of 2008 section and 2015 scheme members who draw down a portion of their benefits and continue working: abatement requires them to reduce their pensionable pay by 10% upon each election to draw down benefits.

Coronavirus Act 2020

Since 25 March 2020, these rules have been suspended by amendments to the NHS Pension Schemes made under section 45 of the Coronavirus Act 2020, one of the pieces of emergency legislation introduced to provide the government and the NHS with the tools required to deal with the COVID-19 pandemic. This provision of the Coronavirus Act is time limited and is due to expire at the end of 24 March 2022.

It was anticipated that the pandemic would place increased pressure on the healthcare system, so it was important that the Coronavirus Act contained provisions to boost NHS workforce capacity. Section 45 of the Coronavirus Act suspends rules in the NHS Pension Scheme to help retired and partially retired staff to return to work or increase their working commitments.

The Coronavirus Act is set to expire at midnight on 24 March 2022, meaning from 25 March 2022 the suspended NHS Pension Scheme rules will come back into force. In November 2021, notice was provided to NHS staff and employers that the temporary easements were due to expire. This notice period was intended to give staff and employers time to adjust to a return to business as usual arrangements. In response, NHS employers and trade union representatives have expressed concerns that the easements are still required to allow staff to contribute additional capacity during the ongoing pandemic response.

Abatement in the NHS Pension Scheme

The normal pension age (NPA) for members of the 1995 section is 60, However, some members are eligible to retire earlier if they hold SCS. SCS is a preserved right awarded to certain professions in the 1995 section, which, subject to qualifying criteria being met, allows a member to retire at 55 instead of 60 without an actuarial reduction in benefits that would normally apply when claiming benefits early. It was withdrawn for new entrants from 6 March 1995 as part of the NHS Pension Scheme restructuring at that time.

In order to qualify for SCS, a member must:

• have been in pensionable employment as a nurse, physiotherapist, midwife or health visitor on or before 6 March 1995
• not had a break in pensionable employment of 5 years or more
• have spent the last 5 years of their pensionable employment prior to retirement as a nurse, physiotherapist, midwife or health visitor

SCS allows members to retire at 55 instead of 60 without the actuarial reduction to their pension that would apply to other members who claim their benefits early. However, under normal arrangements, SCS members who return to work between age 55 to 60 are subject to abatement. This means their pension plus salary cannot exceed their pre-retirement income, and their pension is reduced if it does.

Abatement ceases to apply at age 60. For members with long careers, the abatement ceiling typically prevents them from working more than half-time in the week should they return to work before age 60. However, where abatement applies, even staff with long careers can perform substantial amounts of work.

Figure 1: approximate abatement ceiling for 3 example SCS nurses

Years of service	Current pension in payment	Full-time equivalent (FTE) salary upon re-employment	Approximate abatement ceiling
25	£12,000	£39,027	£26,300
30	£14,400	£39,027	£24,000
35	£16,800	£39,027	£21,600

Source: Government Actuary’s Department

The abatement ceiling limits the amount that returning SCS members can work between 55 and 60 when in receipt of pension benefits. There have been concerns from stakeholders that the eventual reintroduction of abatement would force returning SCS members to retire. This is not the case, as it is still possible for SCS members to perform significant amounts of work without exceeding their abatement ceiling, even for members with long careers.

The below graph sets out the proportion of FTE that the 3 example SCS members could work after claiming their benefits without exceeding their respective abatement ceilings.

Figure 2: abatement ceilings for 3 example SCS nurses as a proportion of FTE

Source: Government Actuary’s Department

The above graph shows the average pension size for 3 example SCS nurses with 25, 30 and 35 years of pension membership at retirement. These members will, on average, accrue annual pensions of £12,000, £14,400 and £16,800 respectively, payable at age 55. The graph also shows the percentage of FTE that each example member could work if they returned to work after retirement while in receipt of pension benefits. All members can work at least half-time when in receipt of benefits before abatement applies.

In the interests of fairness to all scheme members, it is right that abatement applies to SCS members under normal circumstances. Members who qualify for SCS are a closed cohort who are eligible for a valuable benefit that has not been available to new staff since 6 March 1995, even for those in the same professions. SCS allows members to retire 5 years earlier than the NPA, without an actuarial reduction. SCS members do not pay additional contributions for this benefit.

Therefore, abatement limits the ability of SCS members to retire early on an unreduced pension and return to work on a full salary. This ensures fairness to all scheme members and protects the public purse from the impact of staff continuing to work full time while in receipt of generous pension benefits.

However, the response to the COVID-19 pandemic has placed unprecedented pressure on the NHS workforce. At the outset of the pandemic, it was anticipated that measures would be required to boost the available NHS workforce. A key component of the pandemic response has been to encourage retired and partially retired staff to return to work or increase their working commitments. Section 45 of the Coronavirus Act suspends rules in the NHS Pension Scheme to allow retired staff to perform additional work without having the payment of their pension benefits reduced or suspended.

The government is grateful for the contributions of retired and partially retired staff during the pandemic response period. The additional capacity they have provided has been vital in tackling the pandemic and assisting the vaccine roll-out. The Coronavirus Act is a 2-year time-limited piece of legislation that is set to expire from 25 March 2022. However, the emergence of the Omicron variant means the pandemic response is likely to go on beyond this point. It is therefore necessary to consider whether the emergency provisions should be extended for a further period.

Proposed amendments to NHS Pension Scheme regulations

Proposed amendments to NHS Pension Scheme regulations to continue the suspension of restrictions on return to work introduced by section 45 of the Coronavirus Act

DHSC has kept the impact of the temporary easement of NHS Pension Scheme restrictions relating to retired staff returning to work under review, and considers it proportionate to the ongoing pandemic response to continue the easements currently provided by section 45 of the Coronavirus Act for a further period until 31 October 2022.

An extension recognises the emergence of the Omicron variant, which means the pandemic response period is expected to last longer than anticipated. It is therefore proportionate to extend the measures aimed to support the NHS workforce during this period.

We are proposing amendments to NHS Pension Scheme regulations that take effect from 25 March 2022 to ensure continued suspension of NHS Pension Scheme rules following the expiry of section 45 on 24 March 2022.

The amendments to NHS Pension Scheme regulations would replicate the temporary suspension of:

• the 16-hour rule in the 1995 section
• abatement of SCS members who retire and return to work between age 55 to 60 in the 1995 section
• abatement of draw-down members who claim a portion of their benefits and continue working in the 2008 section and 2015 scheme

A suspension until 31 October 2022 ensures that the NHS workforce continues to benefit from increased capacity from retired and partially retired staff during the ongoing COVID-19 response. However, a temporary suspension also ensures the easements remain linked to the pandemic response period only and expire at the correct time once the need for emergency provisions has ended.

The further continuation of the easements allows the NHS sufficient time to deal with the Omicron variant. In fairness to all scheme members and the public purse, it is right that abatement applies under normal circumstances to restrict the benefits provided to a closed cohort of staff.

DHSC recognises that work/life balance and flexibility around retirement options are key concerns for older staff. NHS England and Improvement have launched an initiative focused on employers making flexible employment offers to late career staff. While DHSC keeps the ways in which pension scheme design can support this under review, a major element of the campaign is leveraging the scheme to support retention by promoting to:

• staff the value of continuing to build up their pension
• employers the value of using existing flexibility around working patterns and retirement

These include options for partial retirement and pensionable re-employment in the 2008 section and 2015 scheme

Draft amending regulations

The draft amending regulations are published alongside this consultation document.

Consultation questions

Respondents are invited to consider the following questions:

Do you agree or disagree that the temporary pension easements currently provided by section 45 of the Coronavirus Act should be continued beyond the planned expiry of the act from 25 March 2022?

• Agree
• Disagree
• I don’t know

Please explain your answer

Do you agree or disagree that the continuation of the easements until 31 October 2022 is a reasonable length of time?

• Agree
• Disagree
• I don’t know

Please explain your answer

How to respond

DHSC welcomes views on the proposals set out in this document and the draft legislation to amend NHS Pension Scheme regulations by way of temporary modification.

Comments on the proposals and draft legislation can be submitted:

• via the online survey
• by email to: nhspsconsultations@dhsc.gov.uk
• by post to:

NHS Pensions Policy Team
Department of Health and Social Care
Area 2NE Quarry House
Quarry Hill
Leeds
LS2 7UE

The consultation will close at 11.45pm on 1 March 2022.

Next steps

DHSC has listened to concerns from the NHS and is acting to ensure it has the support necessary for the ongoing pandemic response.

Subject to the findings of this consultation, DHSC proposes to lay a statutory instrument, which takes effect from 25 March 2022, to ensure a continuation of the temporary easements until 31 October 2022.

Data protection

Confidentiality of information

We manage the information you provide in response to this consultation in accordance with DHSC’s personal information charter.

Any information received, including personal information, may be published or disclosed in accordance with the access to information regimes (primarily the Freedom of Information Act 2000 (FOIA), the Data Protection Act 2018 (DPA 2018) and the Environmental Information Regulations 2004.

If you want the information that you provide to be treated as confidential, please be aware that, under the FOIA, there is a statutory code of practice with which public authorities must comply and which deals, among other things, with obligations of confidence.

In view of this, it would be helpful if you would explain to us why you regard the information that you have provided as confidential. If we receive a request for disclosure of the information you have provided, we will take full account of your explanation, but we cannot give an assurance that confidentiality will be maintained in all circumstances.

An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on DHSC.

DHSC will process your personal data in accordance with the DPA 2018 and, in most circumstances, this will mean that your personal data will not be disclosed to third parties.

Privacy notice

This consultation sets out proposals to continue the temporary ‘retire and return’ easements currently provided by section 45 of the Coronavirus Act 2020. This will be provided via amendments to NHS Pension Scheme regulations, which will take effect from 25 March 2022, immediately following the expiry of section 45 on 24 March 2022. The continuation will run until 31 October 2022.

This will allow retired and partially retired staff to continue their return to work or increase their working commitments during the ongoing pandemic response.

As part of the consultation process, you are invited to complete an online survey to provide your views on the proposals.

Data controller

DHSC is the data controller.

What personal data we collect

If you respond via the online survey, we will collect data on your internet protocol (IP) address (this is for security purposes and will not be attached to your survey response).

If you respond via email, we will collect your email address, but we will only contact you in relation to your consultation response.

If volunteered by you during the online survey, we will also collect data on:

• whether you are responding as an individual or on behalf of an organisation

• (if you are responding as an individual) whether you work in the NHS and which NHS role you perform

• (if you are responding on behalf of an organisation) which sector your organisation is in

• your email address

No other personal information will be collected from respondents.

How we use your data (purposes)

The consultation sets out proposals to extend ‘retire and return’ easements in the NHS Pension Scheme. It is therefore useful to DHSC to understand whether you are NHS staff and what roles you perform.

However, no further personal information is collected.

Legal basis for processing personal data

Under article 6 of the UK General Data Protection Regulation (GDPR) (Regulation (EU) 2016/679 of the European Parliament and of the Council), the lawful basis we rely on for processing this information are:

• your consent

Your consent is required in providing the requested information, and it is optional as to whether you choose to provide information regarding the sector you work in. This information is helpful to DHSC in assessing responses to the consultation.

Data processors and other recipients of personal data

All responses to the consultation will be seen by policy leads working on NHS pensions policy in DHSC.

International data transfers and storage locations

Storage of data by DHSC is provided via secure computing infrastructure on servers located in the European Economic Area (EEA). Our platforms are subject to extensive security protections and encryption measures.

Storage of data by SurveyOptic – our online survey platform – is provided via secure servers located in the UK.

Retention and disposal policy

DHSC will only retain your personal data for as long as either:

• it is needed for the purposes of the consultation
• the law requires us to

This means that personal data will be held by DHSC for one year.

SurveyOptic will securely erase the data held on their system 5 years after the consultation’s online survey closes, or when instructed to do so by DHSC if the data has served its intended purpose (whichever happens earlier).

Data retention will be reviewed on an annual basis. Anonymised data will be kept indefinitely.

How we keep your data secure

DHSC use appropriate technical, organisational and administrative security measures to protect any information we hold in our records from loss, misuse, unauthorised access, disclosure, alteration and destruction. We have written procedures and policies, which are regularly audited and reviewed at a senior level.

SurveyOptic is Cyber Essentials certified.

Your rights as a data subject

By law, you have rights as a data subject. Your rights under the GDPR and the DPA 2018 apply.

These rights are:

• the right to get copies of information – individuals have the right to ask for a copy of any information about them that is used
• the right to get information corrected – individuals have the right to ask for any information held about them that they think is inaccurate, to be corrected
• the right to limit how the information is used – individuals have the right to ask for any of the information held about them to be restricted, for example, if they think inaccurate information is being used
• the right to object to the information being used – individuals can ask for any information held about them to not be used. However, this is not an absolute right, and continued use of the information may be necessary, with individuals being advised if this is the case
• the right to get information deleted – this is not an absolute right, and continued use of the information may be necessary, with individuals being advised if this is the case

Comments or complaints

Anyone unhappy or wishing to complain about how personal data is used as part of this programme, should contact data_protection@dhsc.gov.uk in the first instance or write to:

Data Protection Officer
1st Floor North
39 Victoria Street
London
SW1H 0EU

Anyone who is still not satisfied can complain to the Information Commissioner’s Office. Their website address is www.ico.org.uk and their postal address is:

Information Commissioner's Office
Wycliffe House
Water Lane
Wilmslow
Cheshire
SK9 5AF

No decision will be made about individuals solely based on automated decision making (where a decision is taken about them using an electronic system without human involvement) which has a significant impact on them.

This privacy notice is kept under regular review. This privacy notice was last updated on 15 February 2022.

Public sector equality duty

The proposed amendments to NHS Pension Scheme regulations seek to continue the easements currently provided by section 45 of the Coronavirus Act 2020. Therefore, the DHSC’s equality analysis remains consistent with the initial analysis performed at the introduction of the Coronavirus Act.

View the government’s equality analysis for the Coronavirus Act 2020.