NHS Pension - 1995 Section - delaying retirement

Tom_Bradbury

Normal retirement age for the 1995 Section of NHS Pension Scheme is 60, however, if somebody wanted to continue working beyond 60 and delay taking their pension, would this increase the final value of the pension taken if retiring at, say, 65?

Looking at the NHS Pension Agency website there is nothing to indicate what happens for somebody doing this.  What it does say is that a member can retire at 60, take their 1995 pension in full, and then return to work immediately after, but what if somebody doesn't want to 'retire' and just wants to delay taking their pension until later.  Does the pension still increase in value between 60 and 65, and is that increase more that just normal annual uplifts due to the fact that it's being taken later?

ggmf

would this increase the final value of the pension  - No. (you recently have been moved into the 2015 scheme by now, right?)
The annual increase will be CPI only, you will miss out on pensions payments not taken.
Retire and return (in the 2015 scheme) is the answer for you to research.

Dazed_and_C0nfused

ggmf said:

would this increase the final value of the pension  - No. (you recently have been moved into the 2015 scheme by now, right?)
The annual increase will be CPI only, you will miss out on pensions payments not taken.
Retire and return (in the 2015 scheme) is the answer for you to research.

Does retire and return require you to drop your current hours so you don't earn more in pension & salary than you were previously earning?

Or can you take the 1995 pension and return earnings the same amount as before?

ggmf

https://www.nhsbsa.nhs.uk/sites/default/files/2023-03/NHSPensions_RetirementGuide_(V26)_202303.pdf - page 27

spaniel101

You are certainly not forced to take it at NRA.  The continuous Final Salary Link calculation applies to 1995/2008 scheme membership - up until Date of Retirement (scheme put into payment).

HOWEVER, if you are planning on working at least until state retirement age, you do have to do the calculations for yourself to establish what you will loose in Pension Payments (less additional tax whilst continuing to take a salary at the same time) from 60 onwards, as above, these pension payments are not backdated to you beyond NRA  (unless you are fully Deferred - more than 5 year gap between memberships = final salary link 'Uncoupled/Unlinked').     i.e.  There is no 'Late Retirement Factor' in the 1995 scheme, however there is a 'Late Retirement Factor' for the 2015 scheme (beyond NRA Age 67/68 ).

Consider Pension in Payment would increase by CPI each year from NRA 60, as oppossed to Annual Salary Increases (what your Final Salary would increase by each year which would count towards your 1995 final salary link calculation, unless you embark on Promotion).




Abatement does not apply after NRA 60.   If you retire earlier than NRA 60, abatement would only apply if you are Special Class/Mental Health Officer status (and is currently suspended until March 2025).   It does not apply if you are taking 'Early Retirement with Actuarial Reduction' before NRA 60.

hyubh

spaniel101 said:

There is no 'Late Retirement Factor' in the 1995 scheme, however there is a 'Late Retirement Factor' for the 2015 scheme (beyond Age 75  ).

A late retirement factor applies in the 2015 scheme (and 2008 one for that matter) if you retire after scheme NRA, so after SPA in the CARE scheme's case.

kaMelo

Tom_Bradbury said:

Normal retirement age for the 1995 Section of NHS Pension Scheme is 60, however, if somebody wanted to continue working beyond 60 and delay taking their pension, would this increase the final value of the pension taken if retiring at, say, 65?

Looking at the NHS Pension Agency website there is nothing to indicate what happens for somebody doing this.  What it does say is that a member can retire at 60, take their 1995 pension in full, and then return to work immediately after, but what if somebody doesn't want to 'retire' and just wants to delay taking their pension until later.  Does the pension still increase in value between 60 and 65, and is that increase more that just normal annual uplifts due to the fact that it's being taken later?

No, your pension will not increase simply by being deferred.

Since April 2022 you cannot accrue any more years towards the 1995 scheme and there is no increase in pension entitlement for deferring as this is calculated on the best twelve months of the last three years.. In short there is absolutely no financial benefit in not taking the 1995 pension once you reach the NRA.

There will soon be two methods in which to take your 1995 pension and continue working, retire and return and from October 2023 drawdown. Both have their own differing rules about returning to work after claiming a pension.
Retire and return has removed most of the restrictions now, for someone who has reached NRA the only one remaining is the need to take a 24 hour break in employment. After that, someone could return to work full time if they wished. Those opting for drawdown have a requirement to reduce pensionable pay by at least 10% for the first twelve months, after that you could work what you want.

Retire and return
https://www.england.nhs.uk/looking-after-our-people/the-programme-and-resources/pensions-and-flexible-working-in-your-later-career/retire-and-return/
New flexible retirement option including drawdown.
https://www.nhsbsa.nhs.uk/member-hub/your-options-flexible-retirement

Don't underestimate the negative financial impact of not drawing the 1995 pension. Even allowing for significant salary increases, so leading to an increased pension when you do actually claim it, deferring even for a couple of years could take two decades to recover and be in a better financial position.

GrubbyGirl_2

ggmf said:

would this increase the final value of the pension  - No. (you recently have been moved into the 2015 scheme by now, right?)
The annual increase will be CPI only, you will miss out on pensions payments not taken.
Retire and return (in the 2015 scheme) is the answer for you to research.

That's not correct.  The 1995 scheme is final salary so does not increase with CPI, though it will increase with any pay rises or promotions so you don't miss out if you don't take it and your pension will be abated if you return to work

ggmf

Wrong, if the 1995 pension is deferred, or in payment it increases by the September CPI rate in April same as the state pension payments.

There is a statutory requirement to increase public service pensions in payment each year by the same rate as the additional State Pension. The additional State Pension is increased in line with prices, now measured according to the annual increase in the Consumer Prices Index (CPI) as at September of the previous year. Further information is available in the Library briefing on State Pension uprating.

spaniel101

ggmf said:

Wrong, if the 1995 pension is deferred, or in payment it increases by the September CPI rate in April same as the state pension payments.

There is a statutory requirement to increase public service pensions in payment each year by the same rate as the additional State Pension. The additional State Pension is increased in line with prices, now measured according to the annual increase in the Consumer Prices Index (CPI) as at September of the previous year. Further information is available in the Library briefing on State Pension uprating.

If your 1995 scheme is 'Deferred' - in the formal sense and definition of 'More than 5 years between schemes (Uncoupled/Unlinked)', only then it is increased by CPI (in Deferment).

If you are still 'Linked/Coupled' through transition into the 2015 scheme (no break in service of more than 5 years), you retain continuous service with 'Final Salary Link' up until the Date of Retirement (best of last 3 years salary).

Those under Transition/McCloud are not 'Deferred', they are still in active (continuous) membership, with no further 1995 accrual 'years' added, purely Final Salary Link.    

spaniel101

hyubh said:

spaniel101 said:

There is no 'Late Retirement Factor' in the 1995 scheme, however there is a 'Late Retirement Factor' for the 2015 scheme (beyond Age 75  ).

A late retirement factor applies in the 2015 scheme (and 2008 one for that matter) if you retire after scheme NRA, so after SPA in the CARE scheme's case.

Thanks Hyubh - that was my intention, getting carried away with myself!   Edited above.