NHS pension scheme
On this page:
Introduction to the NHS Pension Scheme
Joining the scheme
Who is eligible for the scheme?
What happens if you stop working for the NHS?
The new NHS Pension Scheme from 2015
The 1995 Section and the 2008 Section
What are the benefits common to both sections?
The NHS Pension Scheme was set up in 1948 for all NHS employees and is a statutory scheme, meaning its rules can only be changed by the government.
There are separate NHS pension schemes for England and Wales, Scotland, Northern Ireland and the Isle of Man. All are statutory schemes and are "unfunded" meaning, that there are no assets set aside and benefits are paid by contributions and taxes as they fall due.
When you start working for the NHS you will automatically be included in the NHS Pension Scheme.
The scheme is voluntary, however, so you can choose to opt-out if you wish. You will need to complete a form (SD502) to leave the scheme, which you can obtain from your employer.
Your contribution rate is dependent on how much you earn and for the scheme year 2014/2015 will be between 5% and 14.5%. Your rate is determined on your full-time equivalent pensionable pay.
Your contributions are deducted from your gross pay which means less of your income is taxable. This in effect means that your actual contribution taking into account tax relief is between 4% and 8.7%.
Your employer contribution is currently 14%.
The following people can join the NHS Pension Scheme:
- direct employees of NHS trusts;
- employees of GP practices;
- employees of approved employers that provide services for the NHS;
- medical, dental and ophthalmic practitioners and trainees, although some elements of the scheme are different for different practitioners.
Your options depend on how long you've been in the NHS Pension Scheme.
If you have been in the NHS Pension Scheme for less than two years you can:
- transfer the pension you have built up to a different pension scheme;
- get a refund of your contribution, with tax and national insurance deducted from the amount.
If you have been in the NHS Pension Scheme for two years or more you can:
- leave your pension benefits in the scheme and claim these when you retire (they will increase by inflation in the meantime);
- transfer the pension benefits you have built up to another pension scheme.
With effect from the 1 April 2015 a new NHS Pension Scheme will come into operation.
The key elements of this scheme are:
- a pension scheme design based on average career earnings;
- a pension build up rate of 1/54th of each year’s pensionable earnings with no pensionable service limit;
- increases applied to each year’s pension earned, in service, equivalent to cost of living increases plus 1.5%
- a normal pension age equal to state pension age, but no less than 65;
- existing scheme members as at the 1 April 2012 within 10 years of their normal pension age will retain their current pension age and final salary benefit structure
- all existing members as at the 31 March 2015 will retain a Final Pensionable Pay link on all their service before the 1 April 2015
The NHS Business Services Authority website provides the most up-to-date information about the arrangements for the NHS Pension Scheme beyond 1 April 2015, including some FAQs written with NHS Employers and the NHS trade unions.
The NHS Pension Scheme is divided into two sections.
If you started working for the NHS before 1 April 2008 then you should be in the 1995 section, unless you opted to join the 2008 section when 1995 section members were offered the choice to transfer.
If you started working for the NHS for the first time after 1 April 2008, then you should be in the 2008 section. The different sections are governed by different rules.
The age at which you can retire and draw your pension benefits without your pension being reduced depends on which section you belong to:
- the 1995 section has a normal pension age of 60, but the accrual rate, how fast your pension builds up, is slower than in the 2008 section;
- the 2008 Section has a normal pension age of 65, but a more generous pension build-up rate.
Members of both the 1995 and 2008 sections are entitled to a number of common benefits:
- pension linked to pay and length of membership;
- benefits increased each year in payment in line with cost of living increases;
- death-in-service payment of twice a specific pay definition;
- the potential payment of survivors' pensions to spouses, civil partners, qualifying unmarried partners and dependent children, if member dies;
- possible early payment of pension, which could be enhanced, in the event of ill health.
The Choice 2 exercise gives members of the 1995 section of the NHS pension scheme without full protection, the opportunity to consider moving their 1995 section benefits into the 2008 section of the NHS Pension Scheme in a re-run of the original CHOICE exercise.
A key component of the new 2015 NHS pension dcheme is a higher normal pension age, equal to your individual state pension age. You can retire earlier but your pension will be reduced for being paid earlier.
Had this information been available to you at the commencement of the previous CHOICE exercise, you may not have decided to remain in the 1995 Section.
In the interests of fairness, if you are a 1995 Section member without full protection you are being given another opportunity to move your 1995 section membership to the 2008 section, for all your pre 1 April 2015 service.