Did you know that you can protect a higher salary for NHS Pension purposes if you voluntarily with to accept a less demanding role or you have had to through no fault of your own?
There are 2 provisions available within the NHS Pension which deal with the potential situations described above - Protection Of Pay and Voluntary Protection Of Pay. We will deal with each in turn.
Voluntary Protection Of Pay
Voluntary Protection of Pay was introduced in 2008 for members of the 1995 Section of the NHS Pension Scheme. It gave hospital doctors (not GPs) who are approaching retirement to, if possible, remain in NHS employment but work in a less demanding capacity, whilst protecting their pension benefits.
If a hospital doctor has attained their minimum pension age and then chooses to step down to a less demanding role with less responsibility, they may be able to apply for Voluntary Protection of Pay, if their pay reduces by at least 10%.
The provision of Voluntary Protection of Pay is intended to allow an employer to maintain the valuable knowledge and skills of the doctor, who, without the opportunity to step-down, may otherwise have left the NHS. Therefore, we would normally only expect Voluntary Protection Of Pay to be available if you step-down with the same, or similar, employer.
Remember that Voluntary Protection Of Pay only applies to protecting reductions in pay for pension purposes. If hours are reduced, your employer will still use the notional whole time equivalent pay when calculating retirement benefits.
It is also worth pointing out that your employer can only accept Voluntary Protection of Pay applications if your pensionable pay has been reduced by at least 10% for a period of at least one year beginning with the first pay day the reduced pensionable pay was paid.
If you are a hospital doctor and wish to make an application for Voluntary Protection of Pay then you should complete application form SM R9 and then send this to your employer who arranged the step down. Your employer will then submit the application to NHS Pensions.
Protection Of Pay
If you are a hospital doctor who has at least two years of qualifying NHS Pensionable Service and suffer a reduction in earnings through no fault of your own, you may apply to protect your pension benefits. Protection of Pay applies in all sections of the NHS Pension Scheme (not just the 1995 Section).
Acceptable reasons for Protection of Pay are:
- A change in your duties due to ill health
- A move to a lower paid post because of redundancy
- A transfer to another employment with an employer
In order to apply successfully the following criteria must be met:
- The reduction in pensionable pay must have occurred through no fault of your own
- You must have at least 2 years qualifying service in the NHS Pension Scheme
- The application must be made within 3 months of going on to the reduced pay
Remember here we are talking about protecting a reduced grade - not a reduction in hours. If you reduce your hours then your NHS pension will be calculated using your notional whole time equivalent pay.
Another point to note is that, unlike Voluntary Protection of Pay, there is no minimum level criteria for reduction of pay and no minimum age either.
In order to apply, you should complete application form SM R9 and send to your employer who will review with you and then submit to NHS Pensions.
If you are approaching retirement and feel like Protection of Pay or Voluntary Protection of Pay may be of interest then please get in touch on firstname.lastname@example.org or telephone 0117 9665699. Remember these decisions should rarely be made in isolation and a thorough appraisal of your overall retirement and family plans is adviseable. Get in touch.