NHS Pensions: Contingent decisions

What this means for you

If you opted out of the NHS Pension Scheme between 1 April 2015 and 31 March 2022, you may now be able to reverse that decision.

Following the McCloud Remedy, eligible members can apply to reinstate pension benefits for this period. This could increase your pension, but it’s important to weigh up the cost and potential tax impact.

What you can do

Many members moved from the 1995/2008 scheme into the 2015 scheme and chose to:

• opt out of the scheme (fully or partially)
• stop Added Years or additional pension contracts
• pay for Early Retirement Reduction Buy Out (ERRBO)

 You may now be able to:

• reinstate opted-out pension service
• restart Added Years or additional pension
• have options regarding any ERRBO contributions paid

This applies to active, deferred and retired members.

You don’t have to reinstate everything. You can choose to:

• reinstate only part of your service
• select specific periods
• phase reinstatement to help manage tax exposure

What to consider

Cost and payments
You’ll need to pay the employee contributions you missed, plus interest.

You can usually pay by:

• lump sum
• instalments (typically over up to five years)
• deductions from your pension (if already in payment)

Paying over time will increase the total cost due to interest.

Annual Allowance
Reinstating benefits may create Annual Allowance tax charges.

• Charges before March 2019 won’t be payable
• Charges for 2019/20 will be compensated
• Charges from April 2020 onwards may need to be paid

You can use Scheme Pays to settle tax charges through your pension, but this will reduce your future benefits.

Added Years and additional pension
If you opted out of Added Years or additional pension contracts, you may be able to reinstate them by paying missed contributions and interest.

Applications may be refused if the original decision was due to “financial hardship”.

Deadlines
There is currently no fixed deadline to apply. However, once you receive a personal illustration, you will have 12 months to proceed.

Professional advice costs
You may be able to claim back from NHS Pensions:

• up to £1,000 for accountancy or tax advice
• up to £500 for independent financial advice

Need help?

Deciding whether to reinstate NHS pension benefits isn’t always straightforward. The right approach will depend on your individual circumstances, including cost, tax and long-term planning.

We support NHS pension members with contingent decision applications. We can help you understand the costs, model potential benefits and assess any Annual Allowance impact.

Get in touch with your usual Larking Gowen contact or email enquiry@larking-gowen.co.uk

Jan McLean