Whether it’s through personal choice or a change of job, leaving the NHS Pension Scheme isn’t a decision that should be taken lightly.
The NHS Pension Scheme can offer a range of generous benefits to its members. So, if you’re considering leaving the NHS, it’s well worth thinking about the benefits you might be giving up.
If you do choose to leave the NHS it will likely impact your NHS Pension. How it affects you depends on the scheme you’re a member of and how long you’re away for.
Perhaps you want to try out a different job, fulfil your long-held dream of moving abroad or to spend some precious time caring for a loved one? Whatever your reasons for leaving the NHS, you’ll need to consider your options and what this means for your pension.
In this guide we’ll look at what happens to your NHS Pension if you leave the NHS, and the implications if you choose to rejoin later.
There may be an impressive list of benefits provided to members of the NHS Pension Scheme, but there may also be a few reasons why you want – or need – to leave the scheme, whether temporarily or for good.
The most obvious reason for leaving the NHS Pension Scheme is a change of job. If you have found a new job outside of the NHS and you’ve been an NHS Pension Scheme member for over two years, you should be able to defer your pension. That means you’ll just leave your benefits in the scheme and draw the pension when you reach pension age.
However, it is highly unlikely that you’ll be able to transfer your benefits to a new pension scheme. This is because transferring out of a defined benefit scheme is heavily restricted.
Even if you’re not switching jobs, there might be other reasons for leaving the NHS and opting out of the NHS Pension Scheme.
Whatever the reason might be for leaving the NHS, member contributions are fixed according to salary. So, there’s no option to temporarily reduce your contributions. Therefore, leaving the NHS Pension Scheme might seem like the only option if you’re in need of a short-term cash flow boost.
Often, high-earning members of the NHS Pension Scheme have also seen leaving the scheme as the only option to avoid the high tax charges that come with a breach of the annual allowance.
In both cases, though, there is usually a much more cost-effective way to solve these challenges than just up and leaving the NHS Pension Scheme altogether. Continue reading to find out what your options are…
Any implications of leaving the NHS on your pension will depend on how long you’re ‘away’ for. Leaving the NHS Pension Scheme won’t always be forever – you may need to leave the medical profession for a number of years, or even just for a few months.
If you rejoin the scheme within 5 years or less after leaving, you can usually rejoin your old section of the scheme rather than going into the new 2015 scheme. You will then simply start to accrue benefits again, which will, once again, increase with inflation plus 1.5%.
However, a break from the NHS of more than five years would see your future benefits accrued in a newer NHS Pension Scheme.
An option for some people who are leaving the NHS is to leave their benefits in the NHS Pension Scheme and collect them when they retire. This ‘deferred pension’ option is only available to members who have at least two years of qualifying membership.
If you leave the NHS before completing two years of membership, you’ll only be able to defer your NHS Pension benefits if you’ve transferred a personal pension into the scheme prior to leaving.
When you defer your benefits, your pension effectively sits and waits for you to reach retirement age. It’s unlikely to remain at exactly the same level, though – it will be adjusted in line with inflation each year, to keep pace with any increases in the cost of living.
Deferred NHS Pension benefits can then be accessed from your Normal Pension Age, which is:
If you don’t want to defer your NHS Pension benefits, you can, on some very rare occasions, you might be able to transfer your benefits to a different pension scheme.
However, there are very tough restrictions when it comes to transferring your benefits out of the NHS Scheme. This is because the NHS doesn’t allow transfers to any pension schemes that offer flexible benefits – which most do.
Therefore, you can’t transfer your NHS benefits to a personal pension, SIPP or to a defined contribution workplace pension. And, although it is theoretically possible to transfer to a different defined benefits scheme, most still won’t accept transfers from the NHS Scheme.
In some cases – yes.
If you leave the NHS before completing two years of membership of the NHS Pension Scheme, you will be entitled to apply for a refund of the contributions you’ve already made. You can do this by filling out the RF12 form, available from the NHS Pensions hub.
In some instances, you may have to take a refund of NHS Pension contributions, as you won’t be eligible for any other option.
Refunded NHS Pension contributions include any AVCs (additional voluntary contributions) you may have made during your membership.
You may have to take a refund of contributions if:
If you leave the NHS and have less than two years of qualifying NHS Pension membership, you can apply for a refund immediately.
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