Opting Out or Leaving the Scheme

Following automatic enrolment by your employer, or if you are already an existing member of the HSC Pension Scheme, you decide to opt out of the scheme but are staying in your job, please make sure you fully understand what you are giving up.  Before making your final decision, speak to your employer and seek independent financial advice.

If you have less than two years qualifying service in the scheme, you can apply for a refund of the contributions you have paid.  Refunds are only available to members under normal pension age.  Tax and National Insurance contributions will be deducted from the refund before it is paid to you.

If you have been in the scheme for two or more years, you can leave your benefits with the scheme.  These are called Preserved Benefits.  If you return to work or decide to contribute to the scheme after preserving your benefits, this additional service may be linked with your preserved service, or if more advantageous, separate benefits will be awarded in respect of the additional service.

You may be able to transfer the benefits you have earned in the scheme to another pension arrangement.  You will be required to contact your new pension provider to request further information about this.

If you have reached normal pension age and opt out of the scheme but carry on working in the HSC, you will not be able to claim your retirement benefits until your employment ends.

Some of the benefits of staying in the superannuation scheme are:

Contributions are taken from your pay before tax, so you get tax relief on any amount you pay.

From the day you join you receive life insurance cover and family benefits if you die.

On retirement (after two years membership)  you will receive a basic pension payable for life and a one-off tax free lump sum (equal to three times your pension).

If you are forced to give up work because of ill-health you can apply for ill-Health Retirement and may qualify for an enhancement of your service.

If you have left or are considering leaving the Scheme please ensure you read and understand the information contained within the sections below.

• Opting Out of the Scheme

  Background

  From 6 April 1988 all eligible members were automatically brought into the HSC Pension Scheme on commencing work, but membership is voluntary.

  Before deciding to opt out

  The Opt Out Calculator, in our calculators section will illustrate the impact of your take home pay and contains some standard information outlining the benefits you would lose if you decide to opt out.

  Opting out process

  To opt out of the Scheme a member must complete Part 1 of the SD502 form included in the Application to Leave the HSC Pension Scheme leaflet and return this to your employer.

  The form must be fully completed by you and your HSC employer.

  Once completed and forwarded to your employer, they must then forward this form on to us along with a Termination Of Scheme Membership Notice (T55A) to be completed by your employer. We can then opt you out of the scheme.

  A request to opt out that is made by any other means, e.g. letter, email or made verbally cannot be accepted.

  If you are not able to print off a copy of the application form to opt out of the Scheme, your employer should be able to provide access to facilities which will allow you to do this.

  If you have been paying into the scheme for less than 2 years before opting out, you may be able to apply for a refund of contributions. Details on how to do so can be found by selecting the refunds tab below.

  When does the decision to opt out take effect?

  SD502 received before the end of the first pay period.

  If the SD502 is signed by the member on commencing work and is received by the employer before the end of the first pay period, the member will be treated as never having been included in the Scheme. Any pension contributions taken during this period must be returned locally by the employer. The employer must also make any adjustments that may be required for national insurance and income tax.

  SD502 received after the end of the first pay period.

  If the SD502 is received by the employer after the end of the first pay period the decision to opt out will take effect from the first day of the next pay period following receipt. If appropriate, form REF(1), the application form for a refund of contributions, can also be completed by the member and the employer at this time.

  Where the member has stated on the SD502 that they wish to opt out from a later date the decision to opt out will be effective from the first day of the next pay period following the date given.

  Concurrent Posts

  A member who has concurrent part-time posts may opt out of individual
  posts; they do not have to opt out of all part-time posts.

  However, a Practitioner who opts out of a Practitioner post must opt out of all their practitioner related posts, but they may continue to contribute to the scheme in respect of any concurrent officer posts if they wish to do so.

  Subsequent Posts

  1995/2008 & 2015 Scheme Membership

  If a member has opted out of any of these schemes and then takes on another post with the same or another employer, the employer is bound by the rules of auto enrolment to assess these staff for auto enrolment and enrol them if eligible on their enrolment date. The rules apply even where the employee has already opted out of the Scheme before the enrolment date.

• Rejoining the Scheme after Opting Out

  A member who has opted out can apply to join or re-join the HSC Pension Scheme at any time, subject to satisfying the Scheme regulations on eligibility. However a member cannot under any circumstances apply to re-join the Scheme if they are absent from work for any reason.

  A member contributing to the scheme under a Direction cannot re-join the Scheme in the same employment.

  A member must apply in writing to their employer to join or re-join the Scheme. The member must be entered into the Scheme from the first day of the pay period following receipt of the application by the employer.

  Where the member has stated they wish to join or re-join from a specific date they should be entered into the Scheme from the first day of the next period following this date.

  The date of joining/re-joining cannot be backdated.

• Opt Out Forms

  Application to Leave the HSC Pension Scheme (SD502)

  Termination Of Scheme Membership Notice (T55A)

  Refund of Contributions Form (REF1)
  Please note that it can take up to 3 months for a refund of contributions after a REF1 form has been submitted. 

   

  Guide for completion of Form SD502: Application to leave the HSC Pension Scheme

• Refund of Contributions

  If you have been in the Scheme for less than two years you may be able to have your contributions refunded.

  Before proceeding with a refund request, you should read the information provided throughout this section so you are aware of all options available to you.

  To be entitled to a refund you must meet the following criteria:

  • Be under your Normal Pension Age during the period of membership to be refunded.
  • Have less than two years qualifying membership in the Scheme
  • Have ceased contributions in all HSC employment
  • Not had a transfer into the Scheme from a personal pension provider

  To claim a refund of contributions you must complete and return the following form to the employer where you last paid pension contributions:

  Refund of Contributions Form (REF1)

  Please note that it can take up to 3 months for a refund of contributions after a REF1 form has been submitted. 

  *Also note that members of the 1995 and 2008 Sections of the HSC Pension Scheme who take a refund of contributions will only be eligible to join the 2015 Section of the HSC Pension Scheme if they later return to HSC work.

• Transferring your Pension Out of the Scheme

  Members who decide to opt out or leave the HSC Pension Scheme, may be able to transfer their pension benefits to another pension provider.

  A transfer payment is worked out by converting the value of a member’s pension rights to a current Cash Equivalent Transfer Value (CETV).  To become entitled to a transfer payment, a member must first have been provided with a statement of entitlement (the guaranteed CETV).

  Important changes from 6 April 2015

  The Pension Schemes Act 2015 contained measures to restrict transfers out of unfunded defined benefit public service schemes, except to other defined benefit schemes, unless certain conditions are met.

  Which members are affected by the changes?

  Members affected by the changes are those who want to transfer to a defined contribution (DC) scheme, both in the UK or overseas. This is a scheme from which it may be possible that the benefits provided under the rules of the receiving scheme in respect of the transfer credits/rights resulting from the transfer payment are flexible benefits. Flexible benefits are defined as:

  • A money purchase benefit,
  • A cash balance benefit, or
  • A benefit, other than a money purchase benefit or cash balance benefit,

  calculated by reference to an amount available for the provision of benefits to or in respect of the member (whether the amount so available is calculated by reference to payments made by the member or any other person in respect of the member or any other factor).

  From 6 April 2015 transfers to DC schemes will no longer be permitted.

  Which members are not affected by the changes?

  Members not affected by the changes are those who have:
  1. Requested a transfer to another defined benefit scheme
  2. Left the HSC Pension Scheme with less than two years membership, where the alternative to a transfer is a refund of pension scheme contributions

  Qualifying Recognised Overseas Pension Scheme (QROPS)

  A transfer for members transferring to a QROPS has to follow HM Revenue & Customs (HMRC) legislation in addition to that above.
  HMRC also introduced new legislation on 6 April 2015 preventing a transfer to a scheme that does not meet the ‘Pension Age Test’ and a transfer is not possible if pension benefits can be accessed before age 55.

  One of the checks made by HSC Pension Service is that the receiving scheme is on the HMRC QROPS list. You can check if a scheme is on the QROPS list by referring to the HMRC website: www.hmrc.gov.uk (entering QROPS list in the search engine). If the scheme is not on the list then a transfer to that scheme is not possible.

  If a scheme is on the QROPS list this is not a guarantee that a transfer to such a scheme will be possible. NHS Pensions are required to make checks to ensure the transfer will be an authorised transfer and free of UK tax. A transfer that is not an authorised transfer is not possible.

  HSC Pension Service will write to you or your new pension provider to let you know how these checks will affect your transfer.

  If you want to consider a transfer to an Overseas Pension Scheme please complete the application form in the overseas transfer out guide and application pack

  Pensions on Divorce / Dissolution of a Civil Partnership

  Members who need a CETV for divorce or dissolution of a civil partnership should refer to the Pension on Divorce section.

  More information on transfers can be found in our transfers section.

• Deferred Benefits

  If you have left or intend to leave the Scheme with either:

  • two or more years qualifying membership in the Scheme,
  • or less than two years in the Scheme , with pension rights previously transferred from a personal, money purchase or stakeholder pension.

  You can choose to defer your benefits i.e. leave benefits in the Scheme for payment when you reach your Normal Pension Age.

  Deferment occurs automatically once you leave these benefits in the Scheme for a minimum of 12 months without transferring to another provider or returning to the HSC pensionable membership.

  For more information about deferred benefits please click read the Deferred Members section.