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NHS Pensions Explained

  • January 24, 2022

The NHS Pension Scheme is for those that work within the country’s health service. On 1 April 2015, some major changes to the pension schemes offered by the NHS were introduced. The kind of deal you receive when you retire will depend on when you joined the scheme. There are 2 NHS Pension schemes. There's the 1995 / 2008 Scheme and the 2015 Scheme. To understand which NHS Pension Scheme you're in and what type of member you are click here.

To summarise, the 2015 Scheme is a Career Average Revalued Earnings (CARE) scheme. This is a form of defined benefit pension scheme, which means you get a guaranteed level of benefit at retirement payable according to a fixed formula. Pension benefits for all members are calculated using the same method and revaluation rate. In a CARE scheme your pension is based on your pensionable pay throughout your career. The pension you earn each year is based on actual pensionable pay in that Scheme year and is increased by a set rate, known as revaluation, each year up to retirement or leaving. A ‘Scheme year’ runs from 1 April of one year to 31 March of the following year. The final pension payable is calculated by adding together the revalued pensions earned in each year of membership.

How a CARE scheme works

Your pension builds up depending on four factors. These are:

1. Build up rate - the amount of pension you earn each year is determined by what is known as the ‘build up rate’ which is usually shown as a fraction of your pensionable earnings. In this Scheme the build-up rate is 1/54th, so you earn a pension each year of 1/54th of your pensionable earnings. For example, if you earn £18,000 in a year you would earn a pension for that year of 1/54th of £18,000, which is £333 (rounded down for illustration purposes only). This is the pension you would build up for that year.

2. Annual revaluation - your pension earned each year will be increased each year by a rate, known as ‘revaluation’, in the period before you retire or leave. In this Scheme 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. The pension earned in a Scheme year (April to March) is revalued on 1 April of the following and each subsequent Scheme year until you retire or leave. For example, if the Treasury Order in a year was 2% then the pension would be revalued by 3.5% at the beginning of the following year. If you leave this Scheme before becoming entitled to claim your retirement benefits, annual revaluation stops and is replaced at retirement by the addition of Pensions Increase. Pensions Increase is used to maintain the value of your pension against rises in the cost of living.

3. Length of Scheme membership - you can continue to build up pension rights in this Scheme until age 75 with no limit to the number of years’ pensionable earnings that can be taken into account. The more years of membership you have then the greater number of annual pensions you will earn leading to a bigger overall pension.

4. Pensionable earnings - this is the amount of your income that represents your actual earnings for NHS work and is used to calculate the contributions you pay and how much pension you earn each year. If your pay goes down in any Scheme year, for example you change to a lower paid job, then the amount of pension you will earn in that year will be less than previous years

The numbers in the example have been scaled down from what a doctor should expect but we hope it gives you an idea of how the pensions are worked out.

Opting out of the pension scheme

You can opt out of this Scheme at any time, but you may be automatically re-enrolled by your employer every three years under the auto enrolment process. You can opt out by completing the application to leave the NHS Pension Scheme (SD502) form which is available to download and print here. Before opting out of this Scheme you should carefully compare the relative cost to you and the whole package of benefits provided. If you are in NHS employment you may apply to your employer to re-join if you continue to satisfy the eligibility conditions. You may not re-join if you are absent from work for any reason

When can you 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 your 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.


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