The Treasury has relaxed pension tax rules to allow more retired key workers, such as police officers, to return to duties to help tackle the impact of the Coronavirus outbreak.

The move brings younger retired key workers aged 50-55 into line with retired medical staff and opens the door for more ‘core’ key workers to help tackle the pandemic.

Some key public sector workers, such as police officers, have been able to retire as early as 50 in the recent past after completing a required number of years’ service. This means a significant pool of retired key workers in the 50 to 55 age bracket.

Treasury Economic Secretary John Glen MP yesterday temporarily suspended tax rules that would reduce pension income for recently retired individuals aged 50 to 55 if they are returning to take on roles to support the government’s response to Covid-19.

In a letter yesterday to Kit Malthouse MP, Minister of State for Crime and Policing, he said: “Without this change, and complementary changes also being made to scheme rules for relevant public sector pension schemes (where there has been HMT agreement), there would be a risk that individuals would see pension income reduced so that their net of earnings and pension income do not exceed earnings prior to their retirement, and they could face adverse tax consequences on their pension benefits.”

He added: “I note, in particular, that these changes will ensure that retired police officers who return to work are not penalised financially.”

The changes will initially apply for payments made in the period 1 March to 1 June.

HMRC will publish detailed operational guidance in due course but the change only applies to people returning to roles as a result of Covid-19, particularly for core workforces such as the police – rather than a general lifting of these restrictions, Mr Glen said.