What is the NHS Pension
The history and how it works
What is the history?
Since the inception of the National Health Service Act in July 1946, the NHS has grown to become the largest centrally administered public service pension scheme in Europe.
It is a voluntary defined benefit public service pension scheme. The Pension has been changed many times, the latest was the launch of the new Scheme on the 1st April 2015. This page covers details of how the old scheme with both its sections work. There are additional details on the New 2015 Scheme later on in this part of the site.
The old Scheme had two main sections the 1995 and 2008 each with distinct benefits.
What Do You Pay In?
As an active member a percentage of your salary is deducted from your gross pay each month. This means that employee contributions are taken before any income tax is calculated which makes this tax efficient as it reduces the amount of your income that is subject to Income Tax. The amount that you pay into the pension is determined by your level of pay. As of October 2022 there are 11 ‘Employee’ contribution bands.
Your pensionable pay is not the same as your total gross pay. Depending on your contract (A4C, VSM, ESM, Consultant) and additional work you may do will determine what ‘pay’ is used to calculate your contributions. Please contact us if you would like help on working this out.
What Do You Get Out?
When you decide to leave the scheme and take benefits, you will be entitled to a pension for the rest of your life. This is a ‘government backed’ scheme so you have the security of knowing that this will always be paid, and you will always know how much you will be getting. Normally it will increase by inflation (Consumer Price Index) every April.
If you were to die after taking benefits, your qualifying family may be entitled to a survivor’s pension. There may also be a dependant’s pension, depending upon the age and capacity of the children.
Members of the ‘1995 section’ are also automatically entitled to an additional lump sum and members of the ‘2008 section’ can choose to give up pension for a lump sum (2008 members who were previously in the 1995 section will also have a mandatory lump sum entitlement).
How Much Will You Get?
If you joined after April 2022 then you will solely be in the 2015 Scheme (unless you are a returning to the NHS and have one of the old and now frozen Sections). If you joined before this date and have continued service you will have membership in two, or sometimes all three parts of the NHS Pension(s).
There are various websites that you can go to project your future pension benefits, however, if you would like help to work this out please get in touch with us via the Contact Page (make this a link).
There are many intricacies involved in the NHS pension scheme, as you would expect, as it has to cater for many thousands of members but below are the main points of each section and what it means to you.
Here is a link to the NHS Pension Retirement Guide for additional information.