The Rise of 24 Hour Retirement.

Many of our GP clients are now asking for us to include a “24 Hour Retirement” clause in their Partnership Agreements.  In light of the current uncertainty around public sector pension reform, GPs are taking advantage of NHS pension rules that allow them to draw down their pension while continuing their NHS responsibilities.  This is known as “24 Hour Retirement” because the NHS Pension rules require their staff to retire for 24 hours to enable them to take advantage of the arrangements.

The normal age of retirement under the NHS Pension Scheme is 60, but members can retire before or after the normal retirement age.  Under the Pension Scheme rules, a GP (or any other member of the NHS pension scheme) may choose to “retire” from the NHS for a period of 24 hours, thereby qualifying for retirement benefits, and the GP may then return to work provided he does not undertake more than 16 hours’ NHS work a week for one month thereafter.

Commonly a GP taking 24 hour retirement would hire (and pay for) a locum to cover his workload for the month following his “retirement”, and the GP would continue to draw down his partnership profits, as well as receiving retirement benefits.

If you are considering taking 24 hour retirement, you should consider the following:

1. What does your Partnership Agreement say about 24 hour retirement?  Is it permitted?*
2. How many hours you will work when you return?;
3. Is a locum required to cover your work and if so, who pays?
4. Have the partnership accountants been consulted?  They will need to adjust your profit share and make the necessary adjustments to the partnership accounts;
5. You should also inform your local Health Board about your plans to ensure that they have no concerns about your planned retirement.

Pauline Hogg, a Partner at Condies Health, specialist medical accountants to the health sector, comments:

24 hour retirement is becoming increasingly common with the majority of GPs using it to reduce their sessional commitment but retain either the same, or even an increased level of earnings.  Earnings will increase by both the employee’s and employer’s superannuation which is no longer payable added to the pension they are now receiving.  From a tax, superannuation and seniority perspective we strongly recommend that any GP contemplating 24 hour retirement, or full retirement, speaks to their accountant to ensure that they are aware of the financial implications of this major step, and the importance of choosing the right date on which to retire.  At Condies Health we have our own in-house Independent Financial Advisor, Mark Houghton, and he offers one to one pre-retirement meetings.  Mark can obtain pension figures from the SPPA and project these forward to provide more accurate pension figures and with input from either me or Ian Condie he can advise on the best date on which to retire”.

It is worth noting that for sole practitioners 24 hour retirement is not as straightforward as it is for GPs working in partnership with other GPs, because if a sole practitioner retires the responsibility for his patients and services falls to the Health Board and it may not be possible to reinstate your NHS contract.  If you are a sole practitioner considering your options, please contact us for advice so that you can make prior arrangements.

For more advice on 24 hour retirement, or to discuss your Partnership Agreement, just get in touch. 

Disclaimer 
The matter in this publication is based on our current understanding of the law.  The information provides only an overview of the law in force at the date hereof and has been produced for general information purposes only. Professional advice should always be sought before taking any action in reliance of the information. Accordingly, Davidson Chalmers LLP does not take any responsibility for losses incurred by any person through acting or failing to act on the basis of anything contained in this publication.