Emergency measures that relaxed pensions rules for some retired NHS staff who returned during the pandemic are being extended for another two and a half years, the government has announced.
The Department of Health and Social Care confirmed the suspension of some of the so-called “retire and return” rules would be extended to spring 2025. Ministers originally proposed keeping them until March 2023.
It also revealed plans to consult on a new retirement package for NHS staff.
The extension of the emergency rules only applies to “special class status” staff who were part of the pension scheme before 6 March 1995. This group includes mental health officers, nurses, midwives, health visitors and physiotherapists.
The suspension of the other “retire and return” rules – those relating to the 16-hour rule and draw-down arrangements – will run to March 2023, as initially proposed in the government’s consultation.
The rules were suspended largely to allow those who had retired, or partially retired, to return to service or increase their hours without stopping their pension payments.
The consultation response, published yesterday, said: “The continued need for NHS staff who contract covid to isolate and miss work means that staff sickness absence rates are currently higher than pre-pandemic levels. This has a negative impact on NHS capacity at a time when demand for services is high.
“It is possible that sickness absence rates due to covid will increase further in the coming winter months, due to the respiratory nature of the virus.
“On this basis, the DHSC is of the view that the suspension of the restrictions on return to work should continue.”
A more flexible retirement
In the same statement, the government also announced plans to consult on a new package of “retirement flexibilities” that will be published later this autumn.
The DHSC said this would include:
- Proposals to allow 1995 pension scheme members to partially retire but continue working, and therefore build up their pensions;
- Enabling “pensionable redeployment” for staff who have already retired and then returned to the service; and
- The permanent removal of the “16-hour rule” from the 1995 scheme from April 2023, which required retire-and-return staff to work two days a week or less in the first month after retirement.
Graham Crossley, an NHS pensions expert at wealth management firm Quilter, said the government’s suspension of pensions rules was “pleasing to hear”.
He added: “However, while this is a good start, it provides just a small fix to one part of the major workforce retention issues caused by NHS pensions and taxation.”
There are a number of long-standing issues with the NHS pension scheme, particularly its interaction with the lifetime and annual allowance taxation rules, which restrict the amount higher earners can save into their pension before incurring a charge.
These rules have previously been blamed for discouraging clinicians from taking extra shifts or leaving the NHS entirely.