Public service pension schemes

    Contents

  1. Tax flexibility for public workers returning to work
  2. NHS Pension Scheme
  3. Local Government Pension Scheme (LGPS)

Tax flexibility for public workers returning to work

On 22 April 2020, John Glen, the Economic Secretary to the Treasury, made a written statement in the House of Commons which proposes temporary changes to pension tax for public sector workers (and police officers in particular) returning to help in the fight against coronavirus. The proposals follow on from the temporary changes already made to enable retired doctors and nurses to return to duty without risking their pension income.

In particular, the Government intends to temporarily suspend tax rules that would otherwise apply significant tax charges to pension income received by recently retired individuals aged between 50 and 55. This change, taken alongside complementary changes to rules for relevant public service pension schemes (subject to relevant HM Treasury agreement) will help ensure individuals’ pension income will remain protected if they return to work.

The proposed tax changes will initially apply in respect of payments made in the period from 1 March to 1 June 2020. HMRC will set out operational guidance in due course, but this measure will only apply to people returning to roles as a result of coronavirus.

NHS Pension Scheme

The Coronavirus Act 2020 suspends provisions of the NHS Pension Scheme that would otherwise have an adverse effect on the pension payments of a retired healthcare professional who returns to NHS employment. The intention is that such pension payments will be neither suspended nor reduced in such circumstances.

This temporary suspension has effect in relation to both the pre-2015 NHS Pension Scheme, the post-2015 NHS Pension Schemes and the corresponding NHS schemes in Scotland and Northern Ireland.

Local Government Pension Scheme (LGPS)

Similarly, in the rules of the LGPS, administering authorities are given the discretionary power to set a policy on whether, and in what circumstances, to reduce the pension of pensioners who return to work. Some of these pensioners may include retired health and social workers.

The chair of the LGPS’ Scheme Advisory Board has written to all LGPS pension committees to urge them to suspend or amend any policy which would adversely affect the pension payments of retired health and social workers who return to work.