If you’re a member of the NHS Pension Scheme on the date you’re made redundant, you may have up to 3 options available to you:
The option to retire on the grounds of redundancy may only apply if this is a feature of your terms and conditions.
Defer your pension
You take the redundancy payment from your employer and leave your pension deferred in the Scheme.
This means you may claim your pension at a later date.
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 member whose employment attracts Special Class status (SCS) or mental health officer (MHO) status, the reduction to your 1995 Section pension benefits will be worked out using a normal pension age (NPA) at age 60.
Retire on the grounds of redundancy
If your terms and conditions entitle you to claim an unreduced pension as an alternative to all, or part, of your redundancy payment, you may be able to claim your NHS pension benefits without any reduction.
If you’re unsure if your terms and conditions allow you to retire on the grounds of redundancy, contact your employer.
The cost of your pension not being reduced must be met using your redundancy payment. This is known as the capitalisation cost.
To be eligible you must be an active member of the NHS Pension Scheme on the date you’re made redundant and have:
- the option in your terms and conditions to claim a pension as an alternative to receiving all or part of your redundancy payment
- at least 2 years qualifying membership within the Scheme
- 2 years continuous service, verified by your employer
- reached your minimum pension age of the Scheme you’re a member of
- not unreasonably refused to seek suitable alternative employment and to accept an offer of such employment
Read who is not entitled to claim their NHS Pension on the grounds of redundancy.
If you have pension benefits in the 1995 Section and continue to hold SCS or MHO status, the capitalised cost for your 1995 Section pension benefits will be worked out using an NPA of age 55.
The capitalised cost for any pension benefits in the 2015 Scheme is worked out using the NPA for this Scheme. This is either your State Pension Age (SPA) or age 65 if this is later. If you have an early retirement reduction buy out (ERRBO), this will be taken into account when calculating the capitalised cost.
If the capitalised cost is higher than your redundancy payment and you’re employed under Agenda for Change in England, you can choose to meet some or all of the difference. This may also apply to you if you're not employed under Agenda for Change in England but your contract contains a link to Section 16 of the post-2015 Agenda for Change (England) terms and conditions.
If you choose to meet some, but not all of the cost, a reduction for early payment will apply to the pension benefits which are not met by the payment.
If the capitalised cost is higher than your redundancy payment, your employer will meet the remainder of the cost if:
- you're not employed under Agenda for Change in England
- your contract does not link to Section 16 of the post-2015 Agenda for Change (England) terms and conditions
If the capitalised cost is less than your redundancy payment, your employer will pay the remainder of the redundancy payment to you.