Which? uses cookies to improve our sites and by continuing you agree to our cookies policy.

Public sector pensions explained

NHS pension schemes explained

By Paul Davies

Article 2 of 2

Put us to the test

Our Test Labs compare features and prices on a range of products. Try Which? to unlock our reviews. You'll instantly be able to compare our test scores, so you can make sure you don't get stuck with a Don't Buy.

NHS pension schemes explained

All you need to know about the NHS Pension Scheme - how much you pay in, how the Scheme works, and what you can expect to get back. 

The NHS Pension Scheme is an attractive benefit for those that work extremely hard in the challenging environment of the country’s health service.

On 1 April 2015, some significant changes to the pension schemes offered by the NHS were introduced. The kind of deal you get when you retire will depend on when you joined the scheme.

Which? explains what you need to know about the NHS Pension Scheme - from how it works, the different schemes operating, how much you pay in - and how much you can expect to get back.

In this guide, find out:

 

NHS pensions: which scheme applies to me?

There are three different 'sections' of NHS Pension Scheme - the 1995 Section, the 2008 Section and the 2015 Section.

The 1995 and 2008 Sections of the NHS Pension Scheme pay a final salary pension. The 2015 Section pays an income based on your career average earnings, which is less generous than the final salary scheme.

Some people who were members of the original 1995 or 2008 sections of the NHS pension scheme were moved into the 2015 Section on 1 April 2015.

But others qualify for 'protection' because the age at which they could claim their pension was close when the changes were introduced.

If you've been saving into either the 1995 or 2008 Sections of the NHS Pension Scheme, you could benefit from 'full protection'. This means that you'll stay in the more generous final salary scheme. 

You qualify for full protection if, on 1 April 2012, you were:

  • over your normal pension age; 
  • or 10 years or less from your normal pension age;
  • and in active membership of the scheme between 31 March 2012 and 31 March 2015.

If you've been saving into either the 1995 or 2008 Sections of the NHS Pension Scheme, you could benefit from 'tapered protection'. You'll still move into the less generous career average scheme, but on a date after 1 April 2015.

You qualify for tapered protection if, on 1 April 2012, you were: 

  • between 10 years and 13 years and 5 months away from your normal protection age;
  • and in active membership of the scheme between 31 March 2012 and 31 March 2015.

This means you'll stay in the final salary arrangement for longer. You can work out when you'll move into the career average scheme using this NHS' Tapered Protection calculator.

 

How much you’ll need to put into your NHS pension

Contributions rates into your NHS pension have been fixed for the period April 2015 to March 2019 and apply to both the 2015 and 1995/2008 schemes.

Both full-time and part-time workers pay a percentage of their gross salary into their pension each month. This is topped up by employer contributions and you’ll receive pension tax relief on your contributions.

Contributions are based on your previous years' pensionable earnings and are shown below as a percentage of gross salary (before tax relief).

The employer’s contribution rate changed from 14.3% to 14.38% on 1 April 2017, which includes a scheme administration charge of 0.08%.

Salary range Contribution rate
£0-£25,999 5.00%
£15,432-£21,477 5.60%
£21,478-£26,823 7.10%
£26,824-£47,845 9.30%
£47,846-£70,630 12.50%
£70,631-£111,376 13.50%
£111,377+ 14.50%
 

When you can collect your NHS pension

You get your pension at what is called the 'normal pension age'. This is the age that you retire from working for the NHS and have your pension paid without facing a reduction for early payment.

You can retire early and claim you pension once you reach the minimum pension age (55). However, if you do this your pension benefits will be reduced, to reflect the fact that your pension will pay out for longer.

Your normal retirement age varies depending on what section of the scheme you're in. 

  • 1995 Section - normal retirement age is 60
  • 2008 Section - normal retirement age is 65
  • 2015 Section - normal retirement age is your state pension age.

If you've built up benefits in more than one section of the scheme, you can take them when you reach your normal pension age - without having them reduced.

So, if you were part of the 1995 Section, for example, you could claim your pension at 60 and carry on working. However, you cannot undertake NHS work for more than 16 hours a week in one month after you collect your pension. 

 

How much will a NHS pension pay in retirement?

The amount of income you'll be paid from your NHS pension depends on the scheme you're in. If you're in both the 1995/2008 final salary scheme and the 2015 career average scheme, you'll get a combination of the two.

The 2015 NHS pension is a 'career average revalued earnings' scheme, which is a type of defined benefit pension.

Your final pension is based on pensionable pay throughout your career. Each year, two calculations are applied to a proportion of your annual income is

Build-up rate

The amount of pension you earn each year is worked out via the ‘build-up rate’, which is a fraction of your pensionable earnings. The build-up rate in this scheme is 1/54th, so you earn a pension each year of 1/54th of your pensionable earnings.

Revaluation

Your pension earned each year will also be increased each year by a rate, known as ‘revaluation’, in the period before you retire or leave.

The revaluation rate is determined by Treasury Orders plus 1.5% each year. Treasury Orders are the method by which the Treasury notifies the value of the change in prices or earnings to be applied as part of revaluation.

Calculating your 2015 NHS pension: an example

Josh earned £18,000 in year 1, so his pension would be 1/54th of £18,000 which is £333.

This is then revalued using the agreed formula – say increasing by 3.5%, to give a pension of £345 at the beginning of year 2.
 

With the 1995 scheme, your pension is 1/80th of the best of the last three years’ pensionable pay for each year of membership in the scheme.

The pension is calculated as follows: Pensionable pay x pensionable membership in days x (1/80 x 1/365) = pension.

Calculating your 1995 NHS pension: an example

Jean was in the 1995 NHS pension scheme for 15 years (or 5,475 days).

The best of her pensionable pay in her last three years of work was £33,000.

Her pension is calculated as £33,000 x 5,475 days x (1/80 x 1/365) = £6,187.50 per year.

The 2008 pension is based on your ‘reckonable’ pay. Your reckonable pay is the average of the best three consecutive years’ pensionable pay in the last 10 of year career in the NHS.

Your pension is 1/60th of your reckonable pay for each year of membership in the scheme.

The pension is calculated as follows: Reckonable pay x pensionable membership in days x (1/60 x 1/365) = pension.  

Calculating your 2008 NHS pension: an example

Jack has been part of the 2008 pension for eight years (2,920 days) when he decided to retire. His average pensionable pay was £75,000.

His pension is calculated as £75,000 x 2,920 days x (1/60 x 1/365) = £10,000 per year.

 

What happens if you have a break in service?

If you leave NHS employment and then return, what scheme you subsequently come under will depend on the length of the break and the level of protection you have.

  • If you return to NHS employment after 1 April 2015 following a break of less than five years, are under normal pension age and are entitled to either full protection or tapered protection, you will rejoin the same section of the 1995/2008 Scheme.
  • If you have tapered protection, you will either stay in the 1995/2008 Scheme until your transition date to move to the 2015 Scheme (a date determined by your age in years and months as at 1 April 2012) or move straight into the 2015 Scheme.
  • If you are not entitled to any protection, or move following the end of tapered protection, you will join the 2015 Scheme and your benefits already built up in the 1995/2008 Scheme will be retained and calculated using a final salary pay rate.
  • If you return to the NHS after a break of more than five years then you’ll join the 2015 scheme, and your 1995/2008 and 2015 benefits will be separate.
  • If you rejoin the 2015 Scheme following a break of five years or less, your earlier period of 2015 Scheme membership will link with your current 2015 Scheme membership and the pension rights you built up before the break will receive full in-scheme revaluation.
  • If you rejoin the 2015 Scheme following a break of more than five years, your earlier period of 2015 Scheme membership will not link and in-scheme revaluation will stop. 
  • On retirement your pension will be revalued by the application of a ‘pensions increase’ (used to maintain the value of your pension against inflation).

 

What happens to my NHS pension when I die?

This scheme also looks after your family if something should happen to you. The NHS Pension Scheme provides lump sum and pension benefits in the event of your death, which are detailed below:

  • Lump sum on death – You can nominate that your spouse, registered civil partner or qualifying nominated partner receive a lump sum when you die. The lump sum will be around 2 x annual earnings.
  • Adult dependent’s pension – An adult dependent’s pension is payable for life to an eligible spouse, civil partner or nominated qualifying partner. The benefit is worth around 34% of the full pension.
  • Children’s pension – Children’s pensions are payable for an eligible child or children under the age of 23. The benefit is worth around 17% of the full pension.

Get an expert answer on your pensions 

Our Which? Money Helpline experts can give you independent one-to-one guidance on all kinds of pension queries. If you're not a Which? member and you'd like to get unlimited access to the helpline, you can try Which? Money for two months for £1.

  • Last updated: September 2017
  • Updated by: Paul Davies
SHARE THIS PAGE

Which? Limited (registered in England and Wales number 00677665) is an Introducer Appointed Representative of Which? Financial Services Limited (registered in England and Wales number 07239342). Which? Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Registered office: 2 Marylebone Road, London NW1 4DF.