In simple terms a pension is a saving that you make whilst working to provide an income, or lump sum, to you when you get older and want to stop or reduce working. In simple terms the earlier you save the more options you will have when you want to step back a little.
Pensions should be seen as part of a wider financial plan. For those working in the NHS the NHS Pension allows you to build up a pension. It is important to note that it is different to the State Pension which you are also entitled to. https://www.gov.uk/browse/working/state-pension
Why are pensions important? Have a read of our blog:
https://medicsmoney.co.uk/retirement-planning-for-doctors-in-2025/
There are three sections to the NHS scheme. Two are old, or “legacy”, schemes – the 1995 and 2008 section schemes – which are in the main closed to future years of service accrual.
If you joined the NHS before 31 March 2015 then you may have some pension built up in these sections. If you joined after 1 April 2015 or remained an active member of the scheme after 1 April 2022 then service accrual will be now going into the 2015 section.
For a back-to-basics guide have a listen to our podcast https://medicsmoney.co.uk/captivate-podcast/ep-337-nhs-pension-for-new-and-current-doctors-the-7-billion-question/
The 2015 section of the scheme builds up a pension each year based on 1/54ths of your pensionable earnings. So if you earn £54,000 then £1,000 is “banked” in your pension. Each year that amount gets revalued by a percentage based on 1.5% plus the CPI inflation rate. So for every year you work, you grow your pension which remains protected against inflation.
You can claim 100% of your pension at the normal pension age – which is same as your state pension age in the 2015 scheme. You can take the benefits earlier than this age – but note that early retirement factors will apply.
The 1995 and 2008 sections calculated the pension in a different way depending on whether you were a GP (practitioner) or a Hospital Doctor (officer). For GPs historic amounts built up in the legacy schemes get inflation protected in a similar way to the 2015 scheme. For Hospital Doctors a link to the whole-time equivalent salary you have closer to retirement still exists. Different normal pension ages also apply in these sections.
It is important to note that what you pay into the pension scheme is not invested anywhere. What you get out of the scheme is linked to your pay over the years and isn’t impacted by investment risk.
From 1 April 2022, all active members of the NHS Pension Scheme are members of the 2015 section.
But you might still have some service in the 1995 section if you first joined the Scheme before April 2008.
If you first joined the Scheme between April 2008 and April 2015 you probably have some service in the 2008 section.
| Defined Contribution (DC) “normal pension” | Defined Benefit (NHS Pension) |
|---|---|
| Benefits defined by contributions and size of fund at retirement | Benefits defined by pre set formula of the pension scheme |
| Benefits depend on performance of investments | Benefits based on salary and length of service |
| Benefits vary depending on performance of stock market & other financial products | Benefits guaranteed and underwritten by HM Treasury. |
The NHS pension in England and Wales is administered by https://www.nhsbsa.nhs.uk/nhs-pensions
The NHS pension in Scotland is administered by https://pensions.gov.scot/nhs
The NHS pension in Northern Ireland is administered by https://hscpensions.hscni.net/hsc-pension-scheme/
Each have their own portal which provides you access to an Annual Benefit Statement (often referred to as a Total Reward Statement). In Scotland and Northern Ireland it is the Engage platform. In England and Wales it is either via the Electronic Staff record https://my.esr.nhs.uk/dashboard/web/esrweb or My NHS Pension https://mynhspension.nhsbsa.nhs.uk
The statement only gets updated once a year usually around August. It is useful to download a copy as old versions disappear online and if you ever have a problem with your pension record it’s useful to have kept older versions.
It is also important that you check them each year to see that the latest year’s worth of pension has been added correctly.
Yes and no! It will show what you have built up to date (or the latest forecast date as for GPs that can be more than a year out of date) assuming you retire at the normal retirement date.
What it won’t do is factor in future years of service or early / late retirement options. You have to do your own maths for this or consult an advisor (see below)
As employees you have to pay an employee contribution. How much you pay will depend on which country you are in and how much you earn as a tiering system of percentages applies which changes annually to uplift for inflation. The latest tiered rates can be found on the respective scheme administers websites.
In addition, your employer will also make a contribution based on a percentage of your income. This amount gets reviewed approximately every 4-5 years to ensure the scheme self-funds although the amount the employer pays doesn’t impact the pension you build up as that is linked to how much you earn.
Self-employed GPs don’t have an employer so effectively have to pay both the employee and employer rates themselves.
Pension contributions are tax deductible expenses (see below)
Benefits is probably the wrong description, but the NHS pension also provides protection for death in service and ill health.
You can find more information here.
https://www.nhsbsa.nhs.uk/pensioner-hub/bereavement/what-happens-your-pension-when-you-die
It may also be important to make a nomination as to who receives the benefit. If you are married or in a civil partnership then that’s automatic – but if not it’s really important you make a nomination https://www.nhsbsa.nhs.uk/member-hub/nominations
Becoming too ill to work can happen at any point in your career. The NHS pension provides some cover for this.
https://www.nhsbsa.nhs.uk/member-hub/applying-ill-health-pension-benefits
It is important to note that the cover you need will change throughout your career and you may need to top this up outside of the NHS as your family situation changes. Our blog below contains more information.
Contributions to the NHS pension scheme are tax deductible at the marginal rate of tax on your highest income. https://medicsmoney.co.uk/your-marginal-tax-rate/ This means the cost to you reduces by the tax saving you get.
For employed doctors this is automatically claimed via the PAYE system. The tax you pay through your payslip will take into account the tax relief on the pension automatically and no further action is needed.
Self-employed doctors who are in the pension scheme (GPs) will need to claim tax relief through their annual tax return.
If you are a Resident Doctor you can probably stop here. But you should also make sure you’ve claimed tax back on those super expensive fees and exams by reading our free guide:
https://medicsmoney.co.uk/free-guide/
Also, check your tax code is correct here:
https://medicsmoney.co.uk/is-your-doctors-tax-code-correct/
And finally, read what medical school didn’t teach us about money:
https://medicsmoney.co.uk/ebook/
If you’re a Consultant, GP or other senior doctor, it’s not so simple and you may also need to consider the impact of Annual Allowance tax – start here for some basic information on what it is https://medicsmoney.co.uk/nhs-pension-tax/ If you think you will be impacted then getting the information can be difficult but here are our tips.
If you’ve not heard of an Annual Allowance and service and pay extract, don’t worry it’s relatively new. But it’s also incredibly useful and you can request one by using the contact details in the section below.
In England and Wales ask for a “NHSP05 service and pay extract”. It is a spreadsheet containing historical earnings, service details and also the annual allowance growth calculation.
Watch this YouTube video to learn how to interpret the service and pay extract:
[Your Name],
[Your Date of Birth],
[Your Address],
[Your SD Number (usually found on payslips or previous pension statements)]
Dear Pensions agency,
Please could you send me an up-to-date Pensions saving statement.
Kind regards,
[Your Name]
You should check your 1995/2008 scheme is accurate by requesting a membership statement. It is important that the years of service have been recorded correctly for the legacy pension schemes as the time recorded impacts the pension calculation.
It is important that all doctors check this record and ensure corrections are made as early as possible.
If you want expert help, you might be wondering where can doctors get advice from an expert who actually understands the NHS Pension?
Unfortunately, the NHS Pension has become byzantine in its complexity and very few non expert advisers understand it properly.
Which is exactly why we built Medics’ Money. Our search algorithm matches your unique requirements to the best specialist medical experts.
We’ve matched nearly 20,000 doctors to date.
Find out here: https://medicsmoney.co.uk/medics-money-approved/
