Generous 'retire and rehire' scheme taken up by record number of NHS staff
NHS staff can leave their roles, take their full pension and go back to work as quickly 24 hours.
Record numbers of NHS staff are retiring and then being rehired, some within as little as 24 hours, due to generous pension reforms.
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A rule change in 2023 means they can now rejoin the NHS Pension Scheme (2015 Section).
The NHS retire-and-return scheme works by allowing health service staff to retire, take their full pension, then return to work after a short break and rejoin the NHS pension scheme to keep building future pension benefits.
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Those who decide to re-join the NHS can work as many hours as they wish without having their pension payments reduced or stopped.
The scheme aims to keep experienced staff from leaving the health service and has been a resounding success with a 300% rise in the number of people retiring and then returning to the NHS.
The NHS Pension Scheme is a Defined Benefit scheme and is far more generous than most private sector pensions.
NHS workers enjoy a guaranteed retirement income for life based on their earnings, whereas private sector workers usually have defined contribution pots, which pay an income dependent on contributions and investment performance.
Almost 9,000 rejoined the workforce after taking their pension in 2023-24, compared to 664 doctors. According to the available data, the majority of NHS staff retiring and returning are officers and nurses.
Most private sector retirees today either have rigid retirement rules in their "Defined Benefit schemes" or have a cash pot from which they can choose to take money or not in their "Defined Contribution schemes."
Graham Crossley, NHS pensions specialist at Quilter, the wealth manager that obtained the data, said: “This data shows just how much appetite there is for flexibility among NHS staff.
He further commented “Retire-and-return and partial retirement are proving vital for retaining experienced clinicians and nurses – but they also add complexity. Without proper guidance, staff risk making decisions that could affect their long-term financial security”
In 2023 Sir Jeremy Hunt, then the chancellor, abolished the lifetime allowance – a cap on how much an individual could hold in pension savings – because doctors were leaving the workforce to avoid huge tax bills after breaching the limit.
The 2023 rule changes meant that members of the 1995 pension scheme could go back to work and rejoin the 2015 scheme.
Prior to that, NHS staff rejoining the workforce would have had to save into a less generous pension scheme such as the National Employment Savings Trust (Nest) or they may not have continued contributing to their pension at all.