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 from 1st April 2015 to include the New Scheme. This page covers details of how the old scheme with both its section work. There are additional details on the New 2015 Scheme later on in this part of the site.
It has 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. The amount that you pay into the pension is determined by your level of pay and there are 7 ‘employee’ contribution bands ranging from 5% – 14.5%.
Another key benefit is that the NHS will make a contribution in to your pension for you. Regardless of your contribution band they will pay in 14.5% of your pensionable pay.
Your pensionable pay is not the same as your total gross pay. This will normally not include overtime, but will include CEA’s or a proportion of on-call supplements. 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 are entitled to a widow/widowers pension and/or dependant’s pension, depending upon the age of the children.
Members of the ‘1995 section’ are also automatically entitled to an additional lump sum and members of the ‘2008 section’ can chose to give up pension for a lump sum.
How Much Will You Get?
As already stated the current NHS pension for hospital staff is a final salary scheme. Therefore, the amount of pension you get is determined by 2 key measures:
- How long you have been in the scheme
- What your deemed pensionable pay is at the point of retirement.
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.
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.