Working after retirement

Can I work for the same employer after retirement?

You should ask your employer about their policy regarding re-employment of employees who have retired and claimed pension benefits. For example, the University imposes conditions upon members who retire under severance schemes such as OMIS. You also need to be aware that pension scheme rules may determine whether or not you can be re-employed and how much you can earn in retirement.

There are also rules imposed by HM Revenue and Customs (HMRC) on members who retire on age grounds between age 50 and 55 after 5 April 2010.

What if I retire on age grounds between age 50 and 55 after 5 April 2010?

HMRC raised the minimum age for retirement to 55 for members retiring after 5 April 2010, but members who have service in OSPS or USS before 6 April 2006 can claim their benefits between age 50 and 55 under ‘protected pension age’ regulations. However, HMRC has imposed re-employment conditions on people who retire using their entitlement to a protected pension age. Such members cannot generally be re-employed by the same employer, or a related employer, for six months following retirement (or one month in a materially different role). See HMRC website for more details.

Will my tax-free lump sum be taxed if I am re-employed?

No, HMRC is no longer concerned about this issue.

What is the minimum break I have to take before being re-employed?

Generally, the University requires that you must not be re-employed within one month of retiring. In other words, you must have a minimum break of at least one calendar month. Please contact Personnel Services for more information.

USS now offers a flexible retirement option in which you can retire from part of your post. Please contact the Pension Office or read the USS factsheet.

If you are an NHSPS member and are being re-employed by the University then there are no restrictions. If you are employed in the NHS itself after retirement there are conditions. These are summarised on pages 19 to 24 of  booklet R on the NHSPS website.

Can I claim my pension benefits without taking a break from employment?

Although HMRC now allow this, the rules of the schemes offered by the University do not. You have to leave your current employment to claim your pension benefits. If you are re-employed by the same employer it must be under a new contract.

What if I hold a joint appointment with a college?

If you have a joint appointment with the University and a College, each is considered to be a separate concurrent employment. However, you should be aware that USS provides for each appointment to be defined as a "greater appointment" or a "lesser appointment". The greater appointment is the one that pays the greater proportion of salary.

If you retire from the greater appointment, you can remain in the lesser appointment and remain in USS. You can also take an immediate pension from the greater appointment, provided that USS is satisfied that there is no prospect that the lesser appointment will expand significantly. On the other hand, if you retire from the lesser appointment, and continue to work in the greater appointment, you can only preserve the benefits associated with the lesser appointment (i.e. it is not possible to receive an immediate pension on the lesser appointment) until you also retire from the greater appointment.

If you have more than two concurrent appointments, the greater appointment is the one that pays the greatest proportion of salary. Your other appointments are therefore lesser appointments and the above principles apply.

To avoid unnecessary complications it is recommended that you retire from all your joint appointments simultaneously.

Can I join or rejoin the pension scheme?

If you are in receipt of an OSPS, USS or NHS pension you can join or rejoin OSPS provided you meet the eligibility criteria.

If you are in receipt of a USS pension you cannot rejoin USS. If you are in receipt of an OSPS or NHS pension you can join USS provided you meet the USS eligibility criteria.

Will my pension be affected by my new earnings?

You should tell your new employer that you are in receipt of a pension as both your pension and your new earnings are taxable income. This should ensure that you pay income tax at the correct level on your pension and your new earnings. Your gross pension will not be adjusted because of your earnings unless you retired on the grounds of ill health (see below).

What if I retired on the grounds of ill health?

If you have retired on the grounds of ill health and subsequently your health improves so you are able to take up paid employment or self-employment before your normal retirement date, you must write immediately to the Pensions Office (for OSPS) or USS giving full details of your new earnings. Your pension may be reduced or suspended, depending on the level of your earnings. Failure to notify could lead to forfeiture of the pension.

Both OSPS and USS look closely at cases in which a member who has retired on the grounds of ill health and is re-employed by their old employer or a new employer in a very similar role. If the pension scheme thinks that you have recovered from your illness to the extent that you no longer qualify for ill health retirement under the rules your pension could be cancelled.

Can I put my tax-free lump sum into a pension scheme after retirement?

Yes, but this is called pension recycling and gives rise to tax penalties. Please read the pages on the HMRC website for further details. You should take independent financial advice if you are considering doing this.