Thousands of healthcare workers who have passed retirement age – including GPs and practice staff – are losing out on NHS pension payments because of a lack of awareness about changes to pension rules.
A total of 209,553 members of the NHS pension – all of whom were members of the now closed 1995 final salary scheme – are affected, according to Freedom of Information data gathered by wealth management business, Quilter.
This includes 2,296 GPs, the majority of whom are partners but includes 181 GP locums.
It also includes substantial members of clinical practice staff, such as nurses, as well as non-clinical employees such as practice managers and others.
The issue has arisen because members aren’t familiar with more flexible rules introduced last year to encourage retirees back to work, which mean that members of the 1995 scheme can now claim their pension benefits at normal pension age and return to work, and still continue to pay in to the NHS pension.
Normal pension age for those in the 1995 scheme is 60 or 55 for those with special class status (certain nurses, physiotherapists, midwives and health visitors).
Graham Crossley, NHS pension specialist at Quilter, said: ‘Until April 2023, if you took your 1995 section benefits, you were not allowed to rejoin the NHS pension if you returned to work.’
In other words, he said, previously ‘there was an incentive not to take the 1995 section benefits at normal pension age if you were going to carry on employment in the NHS.’
Additionally, Mr Crossley explained that members with special class status were also delaying taking pension benefits past normal pension age because of abatement, which reduced their pension in payment if they returned to work.
‘However, special class status abatement has now been abolished’
He added that since the changes made last year are relatively new and not all members understand them or how they can benefit, ‘a significant number are missing out on pension benefit payments’.
Even worse, he said, if members do not claim the pension at normal pension age payments will be lost as they are not typically backdated.
Data obtained by Quilter from the NHS Business Services Authority shows there are 143,632 members of the NHS pension who are 60 or older and have not yet claimed their benefits from the 1995 section, even though they have reached the normal pension age of 60. Similarly, 65,921 members are 55 or older and haven’t claimed their benefits from the 1995 section.
Mr Crossley has called on GP practices to take note of the number of staff, including nurses and others, who are missing out on their pension benefits since they have ‘the opportunity to make partial retirement easier for their staff’.
‘I would urge all GP practices to review the NHS Employers’ guide to partial retirement to ensure they are aware of all the ways they can support their staff through partial retirement, potentially without reducing their hours.’
He also said he was surprised by the number of GPs affected. ‘In the main, GPs have some of the best flexibility to take their NHS pension benefits and carry on working via retire and return. It is also worth noting that GP pensions continue to benefit from CPI increases of more than 1.5%.’
But Mr Crossley stressed that any person concerned they could be missing out on pension payments, should seek professional financial advice.
He added: ‘It is worth noting that individual circumstances will have a bearing, there will be some 1995 section members who would benefit from not taking their 1995 section benefits at normal pension age, particularly if they are due a significant increase in pensionable pay.’
In a separate issue, Quilter has also highlighted another barrier to members taking their 1995 section benefits if they want to keep working in the NHS.
Mr Crossly said the two options open to them are to take their pension are to partially retire or to ‘retire and rejoin’ – both of which require their employer’s agreement to facilitate.
He explained: ‘If the employer denies the member’s request, they will be causing a financial loss to the member by effectively denying access to their 1995 pension benefits, unless the member opts to take drastic action such as leaving their employer.’
To avoid this happening, Quilter is urging the Department of Health and Social Care (DHSC) to remove the employer link, so their role is simply to facilitate access to the pension, rather being a gatekeeper.
‘After all, in the private sector, an employee can take their personal pension benefits without informing their employer or getting their employer’s agreement, so why should the public sector be so different?’, Mr Crossley said.
Alternatively, the DHSC should revisit the introduction of late retirement factors into the 1995 section, Mr Crossley said.These would increase pension payments claimed for after the normal pension age.
And lastly, the DHSC should also increase awareness among members of the increased flexibilities around retirement and pension membership, Quilter added.
