During 2023 the NHS Pension Scheme is introducing further flexible options in terms of accessing pension and continuing to work. We published a podcast about these changes in May 2023 and you can find it here.
Within all the public sector pension schemes there are a number of options on flexible (sometimes referred to as partial) retirement. In simple terms, this is where some or all of the pension can be put into payment and the individual can continue working and earning a salary. In many cases they can build up new pension whilst working.
There are a number of specific rules and nuances around this which varies from scheme to scheme. Anyone considering this will need to check how this specifically applies to their circumstances.
These flexibilities help with the transition from working to retirement, where perhaps we are not ready to fully stop work, but we also do not want to continue working at the rate that we have been.
The ability to top up the income with pension and receive a tax-free lump sum is an attractive option. Continuing to build up additional pension will also mean death in service and ill health retirement options will continue to apply.
It is also a good option for employers as it can retain experienced and skilled employees in the workforce for a bit longer – something which can be vital for services such as the NHS.
Employers need to ensure that they are familiar and up to date with options and pension scheme rules. From this they need to derive their own internal processes and protocols to facilitate requests to changes in working patterns, pay and terms and conditions.
What do we think?
This can provide huge benefits in terms of retaining staff. Not just by continuing to benefit from their experience but by also reducing the need to recruit and train new employees. It can make for better succession planning.
We have seen an increase in people who retire but want to continue working in some form. Previously, restrictions around how employers operate policies in many cases have prevented this from operating successfully. In many cases individuals have found the restrictions too difficult to work with and have fully retired.
Employers need to try and move the thought process from ‘it is too hard to manage part time workers’ to ‘this is a great opportunity to get a balance of skill and transition people into retirement’.
Flexible retirement is sometimes seen as purely a benefit for the employee, but this is simply not the case. Have you reviewed the position within your organisation? Are all of your policies up to date?