Pension advice for Mental Health Officers
Who qualifies for Mental Health Officer (MHO) status?
MHO status can be awarded to a 1995 section member working full or part-time on the medical staff of a hospital used for the treatment of patients suffering from mental disorders.
You must also spend the whole or substantially the whole of your time in the direct treatment or care of patients suffering from mental disorders. Although, “substantially the whole time” is not defined in the regulations it is generally accepted as being at least 80 per cent of your work commitment.
MHO status was withdrawn to new entrants on 6 March 1995 in England and Wales and from 1 April 1995 in Scotland and Northern Ireland.
Can I have MHO status in the 2008 section?
If you are a member of the NHS pension scheme 2008 section you are not eligible for MHO status.
Can I retain my MHO status if I transferred from the 1995 section to the 2008 section through the Choice exercise?
The NHS Choice literature made clear that MHO status was lost for members who transferred to the 2008 section through the choice exercise. Any doubled service accrued prior to transferring would no longer apply as only the actual accrued service was transferred.
Can I regain MHO status if I leave NHS pensionable employment and then subsequently return?
If you left your MHO post you can regain MHO status at any time in the future providing that you have not left the NHS pension scheme. If you have left the scheme, with a deferred pension, you must return within five years in order to remain eligible for MHO status.
What are the benefits of MHO status?
There are two benefits to having MHO status:
1. After completing 20 calendar years’ of service in a MHO post every subsequent full calendar year of service in a MHO post is doubled for pension purposes. For example, 30 years as a full-time MHO would count as 40 years.
2. After 20 calendar years’ as a MHO, it is possible to retire from age 55 with no actuarial reduction of pension. It is not necessary to wait until the normal pension age of 60.
What is the maximum service I am allowed to build up?
Your overall maximum service, as for any other member, is 45 years’ of service, (inclusive of doubled service and added years). However, at age 55 the maximum service allowed, inclusive of doubled service and added years, is restricted to 40 years’ of service.
At age 60 the maximum service allowed, inclusive of doubled service and added years, is restricted to 45 years’ of service.
Should you have achieved 45 years’ of service before age 60, you are required to continue to contribute to the scheme until age 60 (unless you retire or opt-out of scheme membership before then).
You must stop paying in, however, at age 65 even if 45 years’ of service has not been reached.
Any service you achieve at ages 55, 60 & 65 in excess of the relevant pension scheme limits, described above, is excluded for pension purposes.
What is my ‘doubling date’ and how does it affect my service?
The day after you have completed 20 calendar years’ in a MHO post is known as your ‘doubling date’. Thereafter, every complete year of service you work in a MHO post will be doubled for pension purposes.
The effect of doubling differs depending on whether you work full-time or part time. For example, where two MHOs have worked for 21 calendar years’ in a MHO capacity, one full-time and the other part-time (5 PAs for example), the service on which their benefits will be calculated will be as follows:
20 years’ full-time MHO plus 1 MHO doubled year = 22 years
20 years’ part-time MHO (5 PAs) = 10 scaled years, plus
1 year at 5/10 commitment doubled = 1 scaled year (365 x 5/10 = 183 (doubled = 365)
Total scaled service for the part-time MHO including doubling = 11 years
Only complete years of service are doubled. Please note that doubled years are only achieved on the anniversary of your doubling date.
For example, working for eight months after your doubling date will not result in an additional period of doubled service in respect of the eight month period.
Because of the impact of doubling, it is possible for MHOs to achieve maximum service limits earlier than other doctors. Any service accrued in excess of the service limits is excluded for pension purposes (see above for further details of service limits)
Please note that added years and any enhancement paid for Tier 2 ill health retirement is not doubled.
Can I buy added years or additional pension?
There may be scope for you to improve your NHS benefits within the previously described service limits.
Whilst it is no longer possible to begin an added years purchase any ongoing contract can continue, even after transfer to the proposed new scheme post 2015.
Since 2008 it has been possible to purchase additional pension (AP).
This enables you to purchase up to an additional £5,000 of annual pension to be bought in units of £250.
You should note that if you purchase AP it is not possible to coordinate the end date of the purchase to coincide with your normal pension age of 55. AP contracts can only terminate at age 60 or 65.
If you retire before the chosen termination date, the AP benefits will be subject to actuarial reduction. This will be the case even where your main benefits are payable in full following retirement at age 55 or later.
I worked in a MHO type post outside the NHS. Can this service improve my NHS pension?
If you carried out MHO type work outside of the NHS, this can be used to count towards the 20 year period required to trigger doubling of service, known as qualifying MHO service, but cannot be used in the calculation of your NHS pension.
The NHS pensions agencies require written evidence of your duties during this non-NHS work, detailing the proportion of work carried out in the direct treatment or care of patients suffering from mental disorders.
The NHS pensions agencies will then determine if the work qualifies to count towards doubling or not. The BMA Pensions Department can assist you with these enquiries.
If you are credited with service of this type, the earliest your doubling can begin is age 50, once 20 calendar years’ of qualifying MHO service has been achieved.
What other MHO duties could count toward towards my qualifying MHO status?
If you undertook any of the following work you can apply for this service to be treated as qualifying MHO service which will count towards the 20 calendar years’ required to trigger doubling:
- work that satisfies the MHO criteria where duties are performed in UK based non NHS institutions
- work that satisfies the MHO criteria where duties are performed overseas
- NHS work that satisfies the MHO criteria where pensionable service has been refunded or transferred out
- NHS work that satisfies the MHO criteria where you did not contribute to the pension scheme.
I am working in a MHO capacity but this is not showing on my service record
It may be that you are not eligible for MHO status (please refer to the FAQ on MHO eligibility criteria). On the other hand, it may just be an error and the BMA can assist you in rectifying this. If necessary they may require evidence of the amount of time spent in the direct care of patients suffering from mental disorders. It is generally accepted that this must be at least 80% of the time. Job plans, contracts and CVs can assist in establishing whether MHO status should apply.
Do my pension contributions automatically stop when I reach the maximum service or age limit?
Should you have achieved 45 years’ of calendar length service before age 60, contributions continue to be payable into the scheme until age 60 (unless you retire or opt-out of scheme membership before then).
If you achieve 45 years’ of calendar length service after age 60 contributions should stop immediately.
Doctors with MHO status must stop contributing to the pension scheme at age 65.
Occasionally MHOs have not been informed that they have reached the maximum service limits and should have ceased contributing to the scheme. Instead contributions have continued to be deducted and MHOs in this situation have assumed that their years of service continued to double and their benefits would be based on their most recent pensionable pay.
The BMA has sought assurances from the various NHS pensions agencies that greater care will be taken to ensure that MHOs and their employers are informed when service limits are reached, in order to avoid unnecessary continued scheme membership and false expectations.
You can get a breakdown of your NHS service from the relevant NHS pension agency and we recommend you request this to ensure your records are correct and up to date. The BMA Pensions Department can help with missing service enquiries.
Am I covered for death in service benefits?
You will be covered for death in service benefits if:
- You are under age 60 and have yet to retire, even if you have achieved scheme maximum service
- You are over age 60 and have withdrawn from contributing to the scheme but have yet to retire.
- If you have opted out of the scheme you will not be covered for death in service benefits.
How does the Annual Allowance affect me?
The doubling of service may increase the chance of exceeding the Annual Allowance and this risk is greater if you are buying added years or additional pension, or have recently received a significant pay rise or additional award ie. a Clinical Excellence Award.
The Annual Allowance for 2013-2014 is £50,000 per annum and £40,000 from 2014.
If I leave the NHS when can I access my NHS pension?
It is only possible to access unreduced benefits from age 55 onwards if retiring from NHS pensionable service, whilst in a MHO qualifying post and after having attained at least 20 calendar years’ of MHO service.
A member with over 20 years’ MHO service who leaves the scheme before age 55, and does not return, can claim their preserved benefits in full at age 60. The benefits will be based on a comparison between a normal non-MHO pension calculation and one which takes account of potential service they could have had had they remained a MHO until age 55. This is known as uniform accrual.
If benefits are accessed before age 60 without rejoining the NHS in a MHO qualifying post they will be actuarially reduced.
A member with over 20 years’ MHO service who leaves the scheme after age 55, and does not return, can claim their preserved benefits in full at age 60. The benefits will take account of any doubling that had been achieved by the time of leaving the scheme.
If benefits are accessed before age 60 without rejoining the NHS in a MHO qualifying post they will be actuarially reduced.
However, when an MHO has 20 years’ or more MHO service and returns to a MHO qualifying post within 5 years of leaving, even for just one day, they can access their benefits in full from age 55 if the retirement application is submitted on the day(s) when pensionable work is undertaken. NB!
What happens if I leave the NHS and decide to transfer my benefits out of the scheme?
Where a MHO transfers service out to another pension scheme, the transfer value is increased, using the uniform accrual method, to reflect the fact that doubled years could have been achieved through continued service in the NHS pension scheme.
Care should be taken when transferring to other public sector pension schemes as schemes are often described as ‘similar’ or with reciprocal arrangements but MHO benefits can be lost if transferred out and then back into the NHS pension scheme.
I have achieved more than 45 calendar years’ of service. How is my pension calculated?
If you work beyond the maximum of 45 years’ pensionable service, the pension is calculated using whichever of the following two options produces the better result:
- pensionable salary up to the date 45 years’ service is achieved (or age 60 if later), combined with service up to that point including doubled years. The resulting pension and lump sum are then increased in line with inflation up to the last day of service, when they are put into payment
- pensionable salary up to the last day of service, combined with service up to that date excluding doubled years.
The NHS pension agencies will automatically pay the most beneficial package.
What happens if I retire on ill health grounds?
If you retire under Tier 2 ill health retirement the enhancement you are awarded will not be doubled.
What happens if I am made redundant?
If you are made redundant and defer taking your benefits, you will retain a normal pension age of 55 (provided that you have had more than 20 years’ service as an MHO) and you will be able to access your accrued benefits in full from this age onwards.
Can I return to work after retirement?
Subject to employer agreement, you may return to work after retiring and claiming your NHS pension. No further access to the NHS pension scheme is allowed except in the following circumstances:
- where retirement was on health grounds and you have rejoined the scheme before age 50 (Tier 1) or age 49 (Tier 2)
- where you claim the pension from a redundant post and remain a member of the NHS scheme while continuing in a concurrent post.
If you are unable to rejoin the scheme, it is possible to contribute to a personal pension or stakeholder pension subject to the annual allowance limit.
Are there any rules around returning to work after retirement?
If you wish to return to work after retirement it is necessary to take a break in service of 24 hours and ensure that you do not exceed 16 hours work per week in the first month following re-employment. At the end of this month you can increase your hours. Alternatively you can take a break in service of one month before returning to any level of work.
Please note that if you do not take the required break, or if you exceed the maximum service during the first month, then your pension will be suspended.
If you return to NHS work before age 60 then your pension may be subject to abatement
What is abatement?
Abatement is the process by which your NHS pension is reduced pound-for-pound if your earnings on re-employment in the NHS, plus your NHS pension, exceeds your NHS pensionable earnings prior to retirement.
Abatement ceases to apply once you reach age 60
Under the government’s proposals for a new pension scheme will I retain my MHO status after 2015?
If you were aged 45 or over on 1 April 2012, were in NHS pensionable employment in a MHO qualifying post and were on track to be able to have achieved 20 years or more MHO service before age 60, you have full protection and will retain your MHO status and have the right to remain in the 1995 section until your chosen retirement date.
If you are not afforded the above protection due to your age you will be required to transfer to the new scheme and MHO status will not be recognised for future accrual.
If you were aged between 41 years and 6 months and 44 years and 11 months on 1 April 2012, were in NHS pensionable employment in a MHO qualifying post and were on track to be able to have achieved 20 years or more MHO service before age 60, you will be afforded transitional protection which will delay the date that you join the 2015 section of the scheme.
If you were not in a MHO qualifying post on 1 April 2012 but regain such status by 31 March 2015, or by the date on which you should transfer to the 2015 section if later (as a result of tapering protection) then you can gain protection if at that time you are on track to be able to achieve 20 years or more MHO service before age 60.
Benefits preserved in the 1995 section will be based on accrued service at the date you transfer to the proposed scheme and your final salary will be based on your earnings leading up to your retirement date.