Abatement might apply if you return to NHS employment after retirement. This includes returning to work for a ‘direction’ employer where access to the NHS pension scheme would normally be available. Direction employers include medical schools and other university institutions.

Abatement might apply if you are under the scheme normal pension age (60 in the 1995 section, 65 in the 2008 section, or your state pension age in the 2015 scheme), and return to NHS employment following retirement on the following grounds:

• ill health
• the early payment of a deferred pension on the grounds of ill health
• in the interests of the efficiency of the service.

In addition to the above if you have MHO (mental health officer) status and retire and then return to NHS employment before age 60, then abatement might apply. The current suspension of the abatement rule for MHOs holds until 31 March 2025.

Outside of the current suspension of the rules for MHOs, abatement will not apply if you return to work outside of the NHS. This is because only post-retirement earnings from employment which would normally be treated as pensionable in the NHS pension scheme are taken into account.

It will also not apply if you return to work after your normal pension age (60 in the 1995 section including for MHOs, 65 in the 2008 section and state pension age in the 2015 scheme).

It no longer applies if you return to NHS employment having retired on the grounds of:

• voluntary early retirement
• age (at your normal/state pension age)
• redundancy.

Abatement does not apply in respect of any re-employment beyond your pension age.

Abatement will not apply to any benefits claimed via draw down (in the 1995/2008 section or 2015 scheme) unless the members pensionable pay/commitment increases within the first 12 months of receiving drawn down benefits. If this occurs during the first 12 months after draw down then the pension will remain abated until the required reduction to 90% of pensionable earnings/commitment is made. During the COVID Pandemic this abatement rule was suspended but is due to resume from 1 April 2023.

Your pre-retirement NHS earnings are based on your actual earnings and not on your notional whole-time equivalent figures. This will be of relevance to part-time doctors.

The NHS pensions agencies will choose the highest pre-retirement pay figure from the last three years of employment, to give as much scope as possible in respect of re-employed NHS earnings.

Therefore, the pre-retirement pay figure used for abatement purposes may not be from the same year as the pay figure that was used to calculate your pension benefits.

This might be beneficial where you have reduced your hours leading up to retirement. For example, if you reduce your hours by 50% one year before your intended retirement date then the retirement pay figure for abatement purposes could be the penultimate year.

However, the annual rate of pay for the purposes of calculating pension benefits could be the final year.

Your pre-retirement earnings relate to your average annual dynamised pay. Dynamised income means it is increased in line with pension increases plus 1.5%.

Your pre-retirement NHS earnings are based on your actual earnings and not your notional whole-time equivalent earnings. This will be of relevance to part time doctors.

Your pre-retirement NHS earnings are the greater of:

• the reckonable pay used to calculate pension benefits, or
• the annual rate of pay for your previous employment at the time it ceased.

Your pre-retirement earnings relate to average annual dynamised pay. Dynamised income means it is increased in line with pensions increases plus 1.5%.

Your pre-retirement NHS earnings are based on your actual pensionable earnings at the time employment ceased (or if better revalued earnings in the last 10 years).

Your pre-retirement earnings relate to average annual pensionable pay.

The enhanced element of your pension is the difference between the pension you are actually receiving and the pension that you would have received if you had retired on the same day on the grounds of voluntary early retirement, and received an actuarially reduced pension.

If you are a member of the 1995 section and you have MHO status, then your entire pension can be abated. However this rule has been suspended until 31 March 2025.

If you do not have MHO status then only the enhanced element of your pension can be abated.

Abatement will continue to apply until the level of your post-retirement earnings, made up of NHS earnings and the unearned portion of your NHS pension, no longer exceeds your pre-retirement NHS earnings or until you reach the scheme normal pension age.

If you are a doctor with MHO status then abatement will continue to apply until the level of your post-retirement earnings (comprising your NHS earnings and NHS pension), no longer exceeds your pre-retirement NHS earnings, or until you reach age 60.

The abatement rules will continue to apply to each part of the pension until you reach the normal pension age for each pension scheme.

Earnings from working as a locum GP via a locum agency or from a limited company from which you have set yourself up as will not count towards abatement.

If you’re a secondary care doctor, earnings from working on a self-employed basis will not count.

Earnings from working for most locum agencies will not count unless they provide access to the NHS pension scheme via a ‘direct engagement model’.

If you work for a locum agency they will be able to advise if this is the case. It is recommended that you do check the position with the locum agency as soon as possible.

Any retirement lump sum payable is not subject to abatement.

Converting pension to optional lump sum will not increase your ‘earnings margin’. The assessment of the ‘earnings margin’ is calculated with reference to your pension before any commutation.

If you moved to the 2008 section and had to commute pension to your lump sum (to provide the Mandatory Lump Sum equivalent to that which you had in the 1995 section), as the reduction to pension was mandatory the earnings margin is calculated after this reduction is made. No further voluntary commutation is taken into account however.