‘Retire and return’ in the NHS: key tips for employers

The Department of Health published guidance last week (dated July 2017) to NHS employing bodies considering re-hiring employees after they take their benefits in the NHS Pension Scheme (NHSPS). This is known as retire and return.

We highlight the main points. View a full copy of the guidance.

Scope

The guidance is for employers, and aims to assist consideration of applications from staff who wish to retire and return to work for the NHS.

The potential to retire and return is open to a wide range of NHSPS members regardless of whether or not they have reached their normal pension age or maximum service limits or exceeded their personal tax allowances. It is specifically noted that it includes those engaged as medical, dental and ophthalmic practitioners.

The onus is on staff to apply to their employer if they wish to retire and return. Returning to work for the NHS whilst in receipt of an NHS pension may have financial consequences for the member and the member should seek appropriate financial advice where necessary.

It is important to note that the circumstances in which a member can return to pensionable employment depends on whether the employee is a member of the 1995 section of the NHS pension scheme, the 2008 section of the NHS pension scheme or the 2015 NHS pension scheme. Section 5 of the guidance provides a summary of this.

Why re-hire a retired employee?

There are many reasons why re-hiring a retired employee could be an attractive option:

• retain the valuable skills and experience of retired employees;
• support the health and wellbeing of older members of staff approaching retirement; and
• potential cost savings by reducing recruitment costs, agency fees and employer pension contributions.

What must employers do?

Policies and procedures

Employers are advised to have clear policies and procedures in place regarding retire and return so that they can demonstrate:

• each request has been considered on its own merits and that requests are not automatically approved or declined;
• current and future workforce requirements have been considered;
• an assessment of the employee’s skills, knowledge and experience has been undertaken against the essential requirements of the post;
• the appointment represents value for money (and that monies could not be better used differently); and
• that the appointment can meet a service need.

It is also useful to have a clear job plan for a returning employee and consideration to how the post will be managed going forward.

Retirees who return from retirement as employees are entitled to the same employment rights as other employees. Any health or other capability concerns should be managed under the trust’s policies. This may not be the case for a retiree who returns on a self-employed basis or on a ‘bank’ of casual workers.

Employers should be prepared to justify their decision

The guidance highlights the potential negative publicity associated with re-hiring retired employees – the squeeze on NHS spending could raise questions as to the appropriateness of paying an employee who is already receiving an NHS pension.

Equally, employers may also be asked to justify their decision to employees and individuals who make unsuccessful requests – it is therefore recommended that employers communicate their retire and return policies to employees and engage them in the process at an early stage.

In addition to having polices in place, keeping written records or notes about the decision-making process will be of assistance if employers are asked to explain their rationale several months after the decision was made.

Consider the alternatives

Retire and return is not the only option available to employers and employees.

Employees who are approaching retirement may be interested in ‘flexible retirement options’ which could be taken instead of retiring completely:

• reducing their working days/hours;
• stepping down to a less demanding or lower graded post; and
• drawing part of their NHSPA benefits early; although this is only open to a member of the 2008 section of the NHSPA and the 2015 NHSPS.

An employer should be prepared to work with an employee to achieve the best outcome for them and for the service.

Commentary

Retire and return can be regarded as an entitlement by NHS staff and has been increasingly used especially given the effect of taxation of pensions. It is undoubtedly a way of retaining experienced staff.

However, this can also store up difficulties for employers. If there is an immediate return there is no breach in continuity of employment and contractual rights are unaffected; the employment position is often unchanged. In the absence of agreements as to job planning employers can find that workforce planning is affected and staff applying later to retire and return can fine that the opportunity to do so is restricted.

Executive directors, especially those with accountable officer status, are subject to other considerations and guidance.