To be eligible to claim your pension on redundancy you must have at least two years qualifying membership within the Scheme, two years continuity of service verified by your employer and have reached your minimum pension age of the Scheme you are a member of.

If the above applies, there are three potential options available to you:

  • Defer your pension - this means that you take whatever redundancy payment has been made available to you from your employer, while leaving your pension deferred within the Scheme.
  • Retire on the grounds of redundancy - this means that you may be able to claim your NHS pension benefits without incurring any actuarial reduction because of early payment. The cost of paying your pension unreduced must be met by using your severance payment, this is known as the capitalisation cost, which must be met by using your redundancy payment.

    If you are a Special Class (SC) member or Mental Health Officer (MHO) the capitalisation cost is worked out using the difference between the unreduced benefits and what an actuarial reduction would have been using a Normal Pension Age of 55.
  • From 1 April 2015 if the capitalisation cost exceeds the redundancy payment any cost remaining after the employee redundancy payment has been used must be covered by the member for those subject to Agenda for Change terms and conditions. The member will be able to pay the remaining cost in full or have some of their benefits actuarially reduced to cover the shortfall. If you cannot afford to pay the remaining costs in full you may pay a lesser amount to limit the actuarial reduction. The employer will continue to meet the remainder of the cost for those not subject to Agenda for Change terms and conditions or those who are made redundant by a Welsh Health Authority.

    In all circumstance where the capitalisation cost is less than the redundancy payment the member will receive the remainder of the redundancy payment.
  • Retire with an Actuarially Reduced pension - this means that you have chosen to claim your pension as an early retirement. Your pension will be reduced accordingly, depending on your age. In this case, your pension is not part of any redundancy settlement between you and your employer. If you are a Special Class / Mental Health Officer member the actuarial reduction is worked out based on a Normal Pension Age of 60.

We cannot advise which of the above options will be available to you, or which is the most beneficial for you. You can discuss the options available to you with your employer.

For more information on retirement visit our website.