In this section of the Learning Zone we will consider doctors' options when you want to retire from NHS employment.
In the 2015 NHS Pension Scheme your Normal Pension Age (NPA) is linked to your State Pension Age (SPA). This is the age that you can take your NHS Pension Scheme benefits without reduction. You can take your benefits before your NPA (currently as early 55) however there will be a reduction because of the fact you are taking your benefits earlier.
Taking Your Benefits
The 2015 NHS Pension Scheme offers a lot of flexibility around when and how you take your benefits. Whenever you decide to take your benefits, you must retire completely for a minimum of 24 hours in order to qualify for your NHS Pension.
- Before Normal Pension Age; you are now able to take some or all of your pension benefits before your Normal Pension Age and continue to accrue further benefits within the Scheme. Remember, as above, that the payment of your benefits will be reduced if taken early.
- Normal Pension Age; at NPA your benefits can be paid out in full whilst you are still able to accrue further benefits whilst in NHS employment.
- After Normal Pension Age; If you decide not to take your benefits at your NPA you are allowed to accrue further benefits in the Scheme all the way up to age 75 (at which point you HAVE to take your benefits). Your benefits will be increased due to them being paid out later.
Your Retirement Benefits
- Pension; a retirement pension will be payable. This will be the total pension that you have built up (and had revalued) over the course of your membership in the 2015 NHS Pension Scheme.
- Tax Free Lump Sum; there is no automatic tax free lump sum in the 2015 Scheme. However you can commute some of your pension at the rate of £12 lump sum for every £1 of pension that you give up. There are limits set by HMRC on how much tax free lump sum that you can take (broadly 25% of the capitalised value of your pension).
- Allocation; it is possible to allocate some of your pension to a dependant which would be payable when you die. This is usually a spouse but can also in some circumstances be a child. The decision to allocate must be made prior to retirement.
As mentioned above, you are able to claim your pension before your NPA if you like. Remember you have to be above the age of 55 currently and have ceased all NHS employment.
The early retirement pension will be reduced due to the fact it is being paid out for longer. How much the pension is reduced by is calculated by how many years in advance of your NPA you take your benefits.
Applying For Your Benefits
The NHS pension will be paid monthly for life and will be protected for inflation by being revalued each year. It can be paid out anywhere in the world. In order to ensure that you receive your NHS pension timely at point of retirement it is best to apply (via a form from your employer) at least 3 months before your intended retirement date.