NHS Redundancy
Redundancy can be worrying. It can also be an opportunity. Knowing your options means you can take back some control and work out the best plan for you
What is Redundancy?
Redundancies happen when a role or roles are no longer needed or the number of those roles are no longer needed.
There are some different things that you need to understand to work out what you can do and what’s best for you. We can help you do that.
Will I get a redundancy payment?
If you’re made redundant you will have a redundancy payment (compensation for losing your job) if
- you have worked for the NHS for a continuous period of at least 2 years (this can be with more than 1 NHS employer AND
- you have not had a break of more than one week (Sunday to Saturday) – the length of your continuous service re-starts if you have had a break of more than that 1 week, which will include Retire & Return breaks of more than 1 week
Will it be a lot?
Your redundancy payment is based on your reckonable service (different to your Pension Scheme reckonable service). Some service isn’t counted including
- any service where you’ve already had an NHS redundancy payment
- any service where you’re already being paid your pension (including Partial Retirement and Retire & Return)
To estimate the redundancy payment, divide your annual salary by 12 to get your monthly salary. Times this monthly salary by the number of full years of reckonable service, up to the 24 months maximum (part years don’t count, so if you have 51⁄2 years of reckonable service, you times by 5 not 51⁄2 years).
You may also pay tax on some of this payment.
If you have already received some pension, you may be entitled to Statutory Redundancy (Pay) Compensation instead for your continuous service, up to the 20 years maximum.
Please note that there are minimum and maximum pay caps when calculating NHS redundancy and more information van be found here: NHS redundancy arrangements | NHS Employers
Please make sure that you research and understand your own position fully.
Can I take my pension as soon as I'm made redundant?
- you’re paying into the NHS Scheme on the date of your redundancy
- you have been a member of the Scheme for at least 2 years
- you have reached your Minimum Pension Age of (at least one of) your Schemes
How we can help
We can help you understand your options and what they mean for you
You have 3 options
- Keep your redundancy payment and
- leave your pension for later, called Defer your pension
- Take your pension now as a normal Early Retirement (reduced as it’s being paid for longer)
- Use some or all of your redundancy payment to buy out some or all of the early retirement reduction so you can take your pension now with less or no reduction
How much money will you need if you don’t get another job? Could you go part-time?
Let us help you find out with our Pensions Modelling
Defer your pension
You take the redundancy payment from your employer and leave your pension safe in the Scheme to claim later.
Retire because of redundancy
You can use your redundancy payment to “buy out” the early retirement reduction your pension (known as the Capitalisation Cost). If your redundancy payment isn’t enough you can top it up to the total Capitalisation Cost and if it’s still not enough you will be buying out part of the reduction so your pension will still be reduced, but by less.
The Cost is worked out using your Normal Pension Age (NPA) for each Scheme:
- For the 2015 Scheme is worked the NPA is your State Pension Age (65, 66 or 67)
- For the 2008 Scheme (Section) it’s 65
- For the 1995 Scheme it’s 60 unless your have Mental Health Officer or Special Class Status when it’s 55
If the Capitalisation Cost is less than your redundancy payment, you’ll receive the “change” – the remainder of your redundancy payment.
Retire early with a pension reduced for early payment
You can take your pension(s)reduced for early payment as it’s paid for more years, and keep your redundancy payment.
Reductions are worked out from your Normal Pension Age for each Scheme separately.
If you have Mental Health Officer or Special Class Status in the 1995 Scheme (and are over age 55) the NPA used to work out your early retirement is from Age 60, not 55.
- you’re paying into the NHS Scheme on the date of your redundancy
- you have been a member of the Scheme for at least 2 years
- you have reached your Minimum Pension Age of (at least one of) your Schemes
There are 3 options available on redundancy.
Defer your pension
You take the redundancy payment from your employer and leave your pension deferred in the Scheme.
Retire with a reduced pension
You choose to claim your pension as an early retirement. Your pension will be reduced depending on your age.
This does not affect your redundancy payment.
If you’re a SC or MHO member, the reduction is worked out on an NPA of 60.
NHSBSA link: Read more information on retirement on our website.