In this part of the learning zone we will consider what retirement flexibility there is in the NHS Pension Scheme.
In both Sections of the NHS Pension Scheme (1995 and 2008) you are able to retire at any time between the minimum pension age and aged 75. However there are also features of both Sections which allow you to retire on a flexible basis, on your terms.
- Flexible Retirement
In the 1995 Section usually you can take your NHS Pension Scheme benefits from any time between the ages of 50 and 75. However, as stated in previous articles, if you take your pension before your Normal Pension Age (60 in the case of the 1995 Section), then your pension will be reduced as it will be paid for longer.
There is an interesting option within the 1995 Section which allows you to take up a less demanding post, yet retain the higher salary for pension purposes.
- Step Down
This is also known as Voluntary Protection of Pay. In this situation, if you have received a pay-cut of more than 10% of your previous earnings as a result of taking up a less demanding job, you can protect the higher salary for pension purposes. The lower paid job must have been carried out for at least 12 months and you must apply for 'Step-Down' within 15 months of starting the lower paid job.
- Flexible Retirement
Within the 2008 Sections there are certain additional features which allow for even greater flexibility. You can retire at any time between your minimum pension age of 55 and 75. Like the 1995 Section, if you take your benefits early they will be reduced.
Within the 2008 Section you can decide to take on a less demanding role as you approach retirement - knowing that the reckonable pay up to 10 years before retirement will be used as the basis for your pension.
The 2008 Section also allows you to leave the NHS, take you pension, and then in the future re-join the NHS and re-join the NHS Pension Scheme.
- Draw Down
Under the 2008 Section rules you can 'draw-down' some of your pension at any time after the age of 55. You can draw-down anything between 20% and 80% of your pension - obviously if you draw-down your benefits before the normal retirement age of 65 they will be reduced. The other condition is you have to have reduced your pensionable income by at least 10% prior to drawdown - and for at least 12 months. Under 'draw-down' you can continue to contribute into your NHS Pension Scheme to take benefits in the future.