The National Health Service Pension Scheme Regulations 2015

CHAPTER 7 Abatement on re-employment

Application of Chapter

101.—(1) This Chapter applies if—

(a) a person who is a pensioner member of this scheme is employed in NHS employment;

(b) the pensioner member’s employment is not employment to which the pensioner member was transferred as a result of a transfer of an undertaking to the pensioner member’s employer;

(c) the pensioner member’s pension is a pension under—

(i) regulation 90;

(ii) regulation 94; or

(iii) regulation 81; and

(d) the pensioner member has not reached normal pension age.

(2) In this Part “NHS employment” includes—

(a) employment in which a person of a category or description listed in Schedule 6 is engaged if the scheme manager has made a determination under section 25(5) of the 2013 Act in respect of the person; and

(b) employment to which a corresponding health service scheme applies.

(3) In this Chapter—

(a) a person to whom this Chapter applies is referred to as an “employed pensioner”;

(b) the pension to which the employed pensioner is entitled is referred to as the “old service pension”;

(c) the employment in respect of which the pension is payable is referred to as the “old employment”;

(d) the employment in which the employed pensioner is employed is referred to as the “new employment”.

(4) For the purposes of this Chapter it is immaterial whether or not the employed pensioner is an active member of this scheme in the new employment.

(5) This Chapter does not apply to a person who is a pensioner member of this scheme if—

(a) the person is employed by an independent provider—

(i) on the day the provider’s status as an employing authority takes effect in accordance with regulation 152 (the effective date); and

(ii) on the day immediately before the effective date; and

(b) any of paragraphs (6) to (8) apply to the person.

(6) This paragraph applies to a person who is not eligible to be an active member of this scheme on the effective date and remains ineligible to be such a member.

(7) This paragraph applies to a person who exercises an option not to re-join this scheme which takes effect from the effective date and has not been cancelled.

(8) This paragraph applies to a person who—

(a) is not eligible to re-join this scheme on the effective date;

(b) becomes eligible to do so on the day immediately after the first anniversary of the person entering NHS employment in accordance with regulation 95(5)(b) (the eligibility day); and

(c) exercises an option not to re-join this scheme that takes effect from the eligibility day which has not been cancelled.

Information

102.—(1) A person who becomes an employed pensioner must—

(a) inform the employed pensioner’s employer in the new employment and any other specified person that the old service pension is payable; and

(b) where requested, provide specified information about the employed pensioner’s relevant income in the new employment to the scheme manager or a specified person.

(2) A person who ceases to be an employed pensioner in one new employment and becomes an employed pensioner in another new employment must—

(a) inform the person’s employer in the other new employment, and any specified person that the old service pension is payable;

(b) where requested, provide specified information about the employed pensioner’s relevant income in the other new employment to the scheme manager or a specified person.

(3) In this regulation, “specified” means specified by the scheme manager.

(4) Relevant income must be construed in accordance with regulation 104.

Reduction of pension

103.—(1) If the condition in paragraph (2) is met, the amount of the old service pension for a scheme year is reduced.

(2) The condition is that the employed pensioner’s relevant income for the scheme year exceeds the employed person’s previous earnings.

(3) The amount of the reduction under paragraph (1)—

(a) is equal to the excess; but

(b) must not exceed the enhancement amount.

(4) Relevant income and the enhancement amount must be construed in accordance with regulation 104.

(5) Previous earnings must be construed in accordance with regulations 105 and 106.

(6) For the purpose of calculating the reduction to be made under paragraph (1) in respect of any part of a scheme year, the amount of the employed pensioner’s previous earnings must be reduced proportionately.

(7) If the employed pensioner has a guaranteed minimum under section 14 of the 1993 Act(1) in relation to the old service pension, nothing in this regulation requires the reduction of that pension below the amount of the guaranteed minimum.

Relevant income and enhancement amount

104.—(1) An employed pensioner’s relevant income for a scheme year is the aggregate of—

(a) the amount of earnings received by the employed person during the year from the new employment; and

(b) the enhancement amount.

(2) The enhancement amount is the difference between—

(a) the amount of the old service pension for that scheme year; and

(b) the amount the pension would have been had it been payable under regulation 79 (early retirement).

(3) If the old service pension is payable under regulation 90 or 94 (ill-health pensions) to an employed pensioner who had not attained normal minimum pension age at the time when entitlement to the pension arose, for the purposes of paragraph (2)(b)—

(a) the fact that entitlement to a pension under regulation 79 depends on reaching that age is ignored; but

(b) the employed pensioner’s actual age at the relevant time is taken into account in determining the reduction to be made under Part 3 of Schedule 13.

(4) If the old service pension is an ill-health pension at Tier 2, for the purposes of paragraph (2)(b), only the employed pensioner’s actual pensionable service at the time when entitlement to the pension arose is taken into account in determining the amount that would have been payable under regulation 79.

(5) If the employed pensioner exercised the option under regulation 77 (conversion of part of pension into lump sum) in relation to the old service pension, the resulting reduction in the pension is ignored for the purposes of this regulation.

(6) If the employed pensioner exercised the option under regulation 51 (election to allocate pension) in relation to the old service pension, the resulting reduction is taken into account for the purpose of this regulation.

(7) References to the amount of a pension for a scheme year are to its amount for that year after any increases payable in respect of the pension under the Pensions (Increase) Act 1971(2), including increases that would have been payable in respect of an amount not paid because of a reduction ignored under paragraph (5).

(8) For the purposes of paragraph (1)(a), the employed pensioner is assumed to be an active member of this scheme in the new employment.

Previous earnings: general

105.—(1) For the purposes of this Chapter, an employed pensioner’s previous earnings is construed in accordance with this regulation.

(2) If the employed pensioner’s old employment was neither as a practitioner nor as a non-GP provider, the previous earnings is the greater of—

(a) the optimum re-valued pensionable earnings in the old employment; and

(b) the annual rate of pay for the old employment at the time it ceased.

(3) If the employed pensioner’s old employment was as a practitioner or non-GP provider the previous earnings is the average of the annual amounts of the person’s re-valued pensionable earnings in respect of practitioner service.

(4) The optimum re-valued pensionable earnings is the re-valued pensionable earnings for the scheme year in the earnings reference period for which the employed pensioner has the greatest amount of re-valued pensionable earnings.

(5) The annual rate of pay is the sum of—

(a) the annual rate of so much of the employed pensioner’s pensionable earnings immediately before the old service pension became payable as consisted of salary, wages, or other regular payments of a fixed nature; and

(b) so much of any fees and other regular payments not of a fixed nature as—

(i) was payable to the employed pensioner during the period of 12 months ending with the day the old employment ceased, and

(ii) formed part of the employed pensioner’s pensionable earnings.

(6) The amount to be taken as the employed pensioner’s previous earnings must be adjusted in each scheme year by increasing it by the same amount as that by which an annual pension equal to that amount would have been increased under the Pensions (Increase) Act 1971 at 6th April in that scheme year if—

(a) the pension was eligible to be so increased; and

(b) the beginning date for the pension were the same as the beginning date for the old service pension.

(7) In this regulation and regulation 106—

“re-valued pensionable earnings” means, in relation to each scheme year in the earnings reference period, the pensionable earnings for that year increased up to the beginning date for the old service pension by the rate of change in prices specified by the Treasury by order under section 9 of the 2013 Act; and

“the earnings reference period” is the period ending on the last day of the scheme year immediately preceding the scheme year in which the employed pensioner left the old employment and starting on the later of—

(a)

the first day of the scheme year in which the employed pensioner first joined this scheme; and

(b)

the first day of the tenth scheme year preceding the scheme year in which the employed pensioner left the old employment.

(8) In paragraph (6) the beginning date, in relation to a pension, is the date on which it is deemed to begin for the purposes of the Pensions (Increase) Act 1971 (see section 8(2) of that Act(3)).

Previous earnings: continuing and concurrent employments

106.—(1) This regulation applies if an employed pensioner has held one or more other NHS employments at the same time as the old employment.

(2) If the employed pensioner’s old employment was neither as a practitioner nor as a non-GP provider, the previous earnings is the amount determined under regulation 105 increased as follows—

(a) if the person holds a continuing non-practitioner employment on becoming entitled to the old service pension, the increase is the annual rate of earnings in respect of the continuing employment;

(b) if the person holds a continuing practitioner employment on becoming entitled to the old service pension, the increase is the average of the annual amounts of the person’s re-valued pensionable earnings in respect of practitioner employment.

(3) If the employed pensioner’s old employment was as a practitioner, the previous earnings is the amount determined under regulation 105 increased as follows—

(a) if the person becomes entitled to receive simultaneously a pension in respect of rights accrued from non-practitioner employment, the increase is the amount of previous earnings in respect of the non-practitioner employment;

(b) if the person holds a continuing non-practitioner employment on becoming entitled to the old service pension, the increase is the annual rate of earnings of the continuing employment.

(4) Paragraph (5) applies if—

(a) the employed pensioner held a part-time pensionable employment immediately before the old service pension becomes payable;

(b) in the 12 months preceding the date on which the old service pension becomes payable the person held concurrent part-time pensionable employment; and

(c) the employment mentioned in paragraph (b) terminated before the old service pension becomes payable.

(5) The employed pensioner’s previous earnings are increased by—

(a) the annual rate of earnings in respect of the concurrent part-time pensionable employment; or

(b) if higher, that part of the pensionable earnings for the employment which is attributable to any part of the period of 12 months mentioned in paragraph (4)(b).

(6) Paragraph (7) applies if—

(a) in the period of 12 months before the date on which the old service pension becomes payable the employed pensioner was in pensionable employment as a practitioner; and

(b) the pensionable employment terminated before the old service pension became payable.

(7) The previous earnings are increased by the average of the annual amounts of the person’s re-valued pensionable earnings in respect of the employment mentioned in paragraph (6).

(8) Paragraph (9) applies if—

(a) a practitioner becomes entitled to payment of a pension under this scheme;

(b) in the 12 months before the entitlement arises the practitioner held concurrent pensionable non-practitioner employment; and

(c) the employment is terminated before the pension becomes payable.

(9) The previous earnings are increased by—

(a) the annual rate of earnings in respect of the employment mentioned in paragraph (8); or

(b) if higher, that part of the pensionable earnings for the employment which is attributable to any part of the period of 12 months mentioned in paragraph (8)(b).

(10) Non-practitioner employment is employment which is neither as a practitioner nor as a non-GP provider, and references to practitioner employment must be construed accordingly.

(11) Continuing employment is pensionable employment—

(a) which a person held immediately before becoming entitled to payment of a pension under this scheme; and

(b) which the person continues to hold whether it is pensionable or not.

Multiple pensions

107.—(1) This regulation applies if an employed pensioner is entitled to more than one old service pension within regulation 101(1)(c) in a scheme year.

(2) In regulation 103, for paragraphs (1) and (2) substitute—

“(1) If the condition in paragraph (2) is met, the amount of the old service pensions for a scheme year are reduced.

(2) The condition is that the employed pensioner’s relevant income for the scheme year exceeds the employed person’s previous earnings for all old employments.

(2A) The amount of the reduction under paragraph (1) in the case of each of the pensions is equal to the same proportion of the excess as the amount of the pension for the scheme year before the reduction bears to the sum of the pensions for that year before the reduction.”.

(3) In regulation 104—

(a) for paragraph (2) substitute—

“(2) The enhancement amount is the difference between—

(a) the aggregate amount of all old service pensions for that scheme year, and

(b) the aggregate amount all of those pensions would have been if they had each been payable under regulation 79 (early payment of pension with actuarial reduction).”;

(b) subsequent references to the old service pension must be taken as references to every old service pension to which the substituted paragraph (2) applies.

(4) Regulation 108 applies as if references to an old service pension were references to every such pension.

Adjustment of reductions

108.—(1) If the old service pension for a scheme year is being reduced under this Chapter, the scheme manager must review the amount of the reduction—

(a) at the end of the scheme year; and

(b) at any time during the scheme year if it appears to the scheme manager that—

(i) the amount of the reduction made for the year is, or may become, incorrect; or

(ii) no reduction should be made.

(2) If at any time during the scheme year it appears to the scheme manager as mentioned in paragraph (1)(b), the scheme manager must make such adjustments as appear to be required, whether by—

(a) altering the amount of the reduction; or

(b) repaying to the employed pensioner any amount that should not have been deducted from the pension.

(3) If at the end of the scheme year it is apparent that—

(a) the reduction in the old service pension for the year was excessive; or

(b) no such reduction should have been made,

the scheme manager must repay the amount due to the employed pensioner.

(4) If at the end of the scheme year it is apparent that the old service pension paid for the year exceeded the amount due because the reduction in the old service pension required under regulation 103 was not made, the employed pensioner must repay the excess to the scheme manager.

(5) Paragraph (4) does not affect the right of the scheme manager to recover a payment or overpayment which is due.

(1)

Section 14 has been amended by sections 151 and 177 of, and paragraphs 27(a) and (b) of Schedule 5 and Part 3 of Schedule 7 to, the Pensions Act 1995 (c.26), section 1(1) of, and paragraph 38(a) to (c) of Schedule 1 to, the Social Security Contributions (Transfer of Functions, etc) Act 1999 (c.2), section 456 of, and paragraphs 1 and 22(1) and (3) of Schedule 11 to, the Proceeds of Crime Act 2002 (c.29), and is prospectively amended by section 24(1) of, and paragraphs 1 and 15(1) to (3) of Schedule 13 to, the Pensions Act 2014 (c.19).

(2)

1971 c.56.

(3)

1971 c.56. Section 8(2) has been amended by section 1(5) of the Pensions (Miscellaneous Provisions) Act 1990 (c.7) and section 39(1) and (4) of the Welfare Reform and Pensions Act 1999 (c.30).