Pensions

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Refund of contributions FAQs

When are refunds of pension contributions payable, how do you apply and is a refund good value for money. These and other queries regarding refunds are all covered below.

When is a refund of contributions payable?
When is a refund of contributions not payable?
Can I request a refund of contributions if I have worked for more than two calendar years?
Can I request a refund of contributions if I have reached the pension scheme normal pension age?
How do I apply for a refund of contributions?
Is a refund good value for money?
Can I avoid taking a refund?
What is approval  for my disqualifying break?
What do I need to do to obtain approval of my break in service?
Why have I received a letter from the Pensions Agency regarding a refund due to me but I have not left the NHS?

 

When is a refund of contributions payable?

Regardless of whether you are contributing to the 1995 or 2008 section of the NHS pension scheme, a refund of contributions can be paid if you have less than two years’ service at the date of your leaving, or opting out of the pension scheme. 1995/2008 section members will be obliged to take a refund if they have a break of 12 months or more and  2015 scheme members will be obliged to take a refund if they have a break of 5 years or more.

 

When is a refund of contributions not payable?

If you have more than two calendar years’ of service a refund cannot be paid. If you joined the 2015 scheme having previously contributed to the 1995 or 2008 section the qualifying service in the 1995 or 2008 section is aggregated with qualifying service in the 2015 to determine whether a refund is payable. If you have less than two years but have transferred pension rights from a personal pension plan or retirement annuity contract you are not able to claim a refund.

 

Can I request a refund of contributions if I have worked for more than two calendar years?

No.  You can only apply for a refund if you have less than two calendar years’ of scheme membership at the date you leave or opt out of the pension scheme.

 

Can I request a refund of contributions if I have reached the pension scheme normal pension age?

No. You are not able to take a refund if you reach normal pension age, 60 in the 1995 section, 65 in the 2008 section or state pension age in the 2015 scheme, during the period of membership for which the refund is being requested.

 

How do I apply for a refund of contributions?

If you are eligible for a refund you can apply immediately after leaving the NHS. 

If you do not apply for a refund the relevant pensions agency will write to you once you have incurred a disqualifying break (this is a break in service of 365 days or more in the 1995/2008 sections or a break of 5 years or more in the 2015 scheme ). The letter will inform you of how to apply.

  • If you are contributing to the NHS pension scheme in England and Wales apply for a refund on form RF12.
  • If you are contributing to the NHS Superannuation Scheme (Scotland) apply for a refund on form REF1.
  • If you are contributing to the HSC pension scheme in Northern Ireland apply for a refund.

 

Is a refund good value for money?

Generally speaking, it isn’t. This is because:

  • All pension benefits built up so far are lost,
  • Employer contributions paid to the scheme are not refunded to the member,
  • The refund is subject to the following deductions:

    - It will be taxed at 20% if the refund is less than £ 20,000 and 50% on any amount above this level, and

    - There will be extra National Insurance contributions to pay. This is because members of the NHS pension scheme pay a reduced rate of National Insurance contributions and the amount saved must be repaid if a refund is taken. This payment entitles you to State Second Pension (S2P) membership in respect of the period for which the contributions are refunded.


Can I avoid taking a refund?

This might be possible in the following ways:

  • Return to NHS pensionable employment within 365 days (1995 or 2008 section members) or within five years (2015 scheme members). Even if this is just for one day, this will ensure that a disqualifying break is avoided. This post must be pensionable. Agency work is not pensionable and would therefore not be sufficient to avoid a disqualifying break.
  • Work for an organisation covered by a direction arrangement.  Please see our FAQ on Direction Arrangements. If you work for a direction employer, your NHS membership will be seen as continuous and you will not incur a disqualifying break.
  • Take a period of approved unpaid leave or a sabbatical and continue to pay pension contributions. It may be possible, at your employers discretion, to agree a period of unpaid leave from the NHS, whilst continuing to pay contributions. If this unpaid leave exceeds six months you will be required to pay the employer contributions as well. Please see our FAQ on Authorised Absences.
  • Continue to pay contributions during maternity leave. For more information on this, please see our FAQ on Maternity, Paternity, Adoption Leave.
  • Obtain ‘approval’ to avoid a break in service caused by illness.
  • Obtain ‘approval’ for periods of work, training or study.
  • Transfer your benefits into another pension scheme.


What is approval for my disqualifying break?

You can apply for approval if your break in service has been caused by illness or if your period of study, training or work outside the NHS is likely to improve your usefulness to the NHS when you return. Approved employment might include periods where you are working abroad or in hospices (non NHS). Approval is not usually given for work in private hospitals.

 

What do I need to do to obtain approval of my break in service?

You will have to contact the relevant pensions agency preferably before you commence the period you seek approval for or as soon as possible afterwards. You will need to provide evidence to support your application illustrating that your training, work or study will enhance your usefulness to the NHS.

 

Why have I received a letter from the Pensions Agency regarding a refund due to me but I have not left the NHS?

This might be because you have changed jobs and are now working in a different  part of the UK. Your NHS pension is administered separately between the nations and does not automatically follow you on moving jobs.  You will need to initiate a transfer yourself and should do this as soon as possible (and no later than 12 months after taking up your new post).  Please refer to our FAQ on Transfer of pension rights.

Additionally, if NHS Pensions were unable to pay a refund following a disqualifying break (please see above) as they did not have your contact details they will look to do this now even if you have since returned to NHS pensionable employment.  It may only be possible to avoid this if your break is retrospectively approved (please see above).