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Document Can I return to work if I am receiving a Tier 2 ill health pension?

If you want to retain your Tier 2 ill health pension there are restrictions based on the kind of work you do and the amount of money you earn. These restrictions differ primarily on whether you return to work in the NHS or not. There are two restrictions for those who return to work in the NHS and one for those outside NHS work.

Under the rules governing the continued receipt of a Tier 2 ill health pension you will be subject to an annual review.

NHS Work only:

You cannot work for more than 12 months in the NHS and keep your Tier 2 ill health pension. The start of the 12 month period is the first day you start work in the NHS after your retirement. For members working on a nurse bank, the start of the 12 month period is the first date of actual work, not the day you register with the bank.

If you do any work within the NHS after this 12 month period has ended, your Tier 2 ill health pension will be substituted with a Tier 1 ill health pension on the first pension payment date after the first day spent working in the NHS after the 12 month period ended. You will be unable to regain Tier 2 if you have broken this restriction. You would also be subject to the restrictions listed below. Any Tier 2 benefits received by the member after the 12 month anniversary must be recovered as this would be classed as an overpayment of benefits.

All work including Non NHS Work

Your gross earnings in any given tax year must not exceed the Lower Earnings Limit (LEL) for primary class 1 National Insurance contributions for that tax year. The LEL is set by HM Revenue & Customs (HMRC) and the value for any given tax year can be found on the HMRC website.

If, in the course of working, your earnings exceed the annual LEL in any given tax year, your Tier 2 ill health pension will be substituted with a Tier 1 ill health pension. If this occurs your original lump sum would remain unaffected. You may have the opportunity to regain Tier 2. To regain your Tier 2 pension you must be:

  • under your normal pension age, and
  • have ceased working; and
  • provide supporting medical evidence

ALL before the end of one year, beginning on the day your earnings exceed the LEL which again satisfies the Tier 2 conditions.

Should you decide to undertake any unpaid, voluntary work within or outside the NHS then your scheme benefits will not be affected, however you should declare the fact that you are doing voluntary work on any forms you receive from NHS Pensions.

These restrictions apply if you are taking your Tier 2 benefits as an ill health pension. If you exchanged your ill health benefits for a one off lump sum due to terminal illness they will not apply, even if your condition improves and you return to work.

For more information, please see the Ill Health Retirement factsheet – Returning to work on our website.

tier 2 , return to work, lel, lower earnings level, restrictions, 
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