Procedures for individuals retired on ill health returning to work: FOI release

Information requested

1. Please can you provide precise details on what "gross earnings" and "income from any source" mean for the consideration of upper tier ill health pension payments (see below from your website).

2. For example if a retired doctor was to do 2 hours of independent consultancy work at £100 an hour each week, would that be considered their gross earnings, or would they be able to take off expenses from that such as would be accepted as business expenses for tax purposes? E.g. professional body registrations, insurance, disposables, CPD etc.

3. Would a retired doctor be able to run a small business selling arts and crafts for example that they do as a hobby. Or perhaps be able to tutor for a few hours a week? If so would it just be the profits from this that would have to come under the lower earnings limit?

4. If they published a book they wrote as a hobby and it was successful, would they be able to benefit from the income from this if it exceeded the lower earnings limit?

5. How would SPPA treat fees or honorariums for speaking at a conference or similar? Would this count as employment, if done as an individual?

6. How would a retired doctor be expected to evidence their income/profit for these kind of things?

7. Please could you let me have any information that demonstrates how the conditions (below) would be applied for a retired doctor (tier 2 ill health) who might earn a small income as a sole trader or a limited company, or for public speaking but does not "take home" more than the lower earnings limit?

8. Note, I would not be talking about large sums of money, but where someone might receive £8000 a year but have £2000 of related expenses. Obviously £8000 would mean losing the tier 2, but taking account of expenses this would fall to £6000 and would be OK.

9. Would working as a sole trader constitute "re-employment"?

Response

Question 1 - Please can you provide precise details on what "gross earnings" and "income from any source" mean for the consideration of upper tier ill health pension payments (see below from your website).

Response - The rules regarding further employment where a member is in receipt of an upper-tier ill health retirement pension are provided for by the NHS Superannuation Scheme (Scotland) 2011 or 2013 Regulations, or the NHS Pension Scheme (Scotland) 2015 Regulations, depending on which scheme the member retired from. All three sets of scheme Regulations provide that where a member's “annual earnings” from “further employment” (whether NHS employment or otherwise) in any tax year exceed the lower earnings limit (LEL) for national insurance contributions, the member’s upper-tier pension is to be replaced by a lower-tier pension.

The Regulations do not go as far as to define what is meant by “annual earnings” therefore it is given its ordinary meaning and is considered to mean gross earnings. Similarly, for someone who is selfemployed their earnings are considered as gross income rather than turnover.

Question 2 - For example if a retired doctor was to do 2 hours of independent consultancy work at £100 an hour each week, would that be considered their gross earnings, or would they be able to take off expenses from that such as would be accepted as business expenses for tax purposes? E.g. professional body registrations, insurance, disposables, CPD etc. £100 would be considered their gross earnings.

Response - For a self-employed member their earnings would be their gross income and would therefore include deductions for expenses considered to be business expenses for tax purposes.

Question 3 - Would a retired doctor be able to run a small business selling arts and crafts for example that they do as a hobby. Or perhaps be able to tutor for a few hours a week? If so would it just be the profits from this that would have to come under the lower earnings limit? It would be the gross earnings from this employment; i.e.,

Response - A retired doctor would be able to set up a small business or provide tutoring. This would be considered as further employment and their annual gross income (as set out in the answer to question 2) from those activities would have to be below the LEL for national insurance contributions in order for them to retain entitlement to their upper-tier ill health pension.

Question 4 - If they published a book they wrote as a hobby and it was successful, would they be able to benefit from the income from this if it exceeded the lower earnings limit?

Response - This would count as earnings from employment and as long as the gross income remained under the LEL they would retain their upper-tier ill health pension.

Question 5 - How would SPPA treat fees or honorariums for speaking at a conference or similar? Would this count as employment, if done as an individual?

Response - Yes, this would count as earnings from further employment.

Question 6 - How would a retired doctor be expected to evidence their income/profit for these kind of things?

Response - If a retired doctor, who is in receipt of an upper-tier ill health pension, enters into further employment they must keep a record of their gross earnings and tell SPPA immediately if their earnings are about to exceed the LEL for national insurance contributions (£6,240 for 2020/21).

Question 7 - Please could you let me have any information that demonstrates how the conditions (below) would be applied for a retired doctor (tier 2 ill health) who might earn a small income as a sole trader or a limited company, or for public speaking but does not "take home" more than the lower earnings limit?

Response - As detailed in the questions above, if a retired doctor has gross earnings which exceed the LEL they must inform SPPA and their upper-tier ill health pension would be replaced by a lowertier pension from the next payment date following the date the earnings first exceeded the limit. If by ‘take home’ earnings you mean earnings after tax then this figure is irrelevant as it is gross earnings which are measured against the LEL.

Question 8 - Note, I would not be talking about large sums of money, but where someone might receive £8000 a year but have £2000 of related expenses. Obviously £8000 would mean losing the tier 2, but taking account of expenses this would fall to £6000 and would be OK.

Response – This is a formal notice under section 17(1) of FOISA that the Scottish Government does not have the information you have requested.

This does not fall within the scope of the FOISA request, this would mean SPPA giving an opinion or judgement that is not already recorded.

Question 9 - Would working as a sole trader constitute "re-employment"?

Response - Working as a sole trader would count as further employment for the purposes of determining whether an upper-tier ill health pension should be replaced with a lower-tier pension.

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