The NHS pension – Is it worth it?

 In Business, Change, Financial, Making Choices, Pensions

I have been advising doctors and surgeons for the last 20 years and for most of that time their NHS pension was a simple part of that advice process, it could be left in the background quietly building a pension for the member until they reached 60+, then retirement a pension and lump sum arrived – job done!

However, over the last few years numerous changes to both general pensions regulation and the NHS pension scheme itself have come together to have a huge impact on this passive status quo.

These were the closure for most younger doctors of the Final Salary scheme (1995 scheme) and the subsequent switch to a Career Average Revalued Earnings (CARE) scheme (2015 scheme) as well as the introduction of Lifetime and Annual allowance limitations on total pension fund and annual contributions to a pension that could be allowed without triggering a tax charge for the individual.

I don’t want these articles to get too technical (I mean can you imagine a boring article on pensions legislation?!)

However, I do want to scratch the surface a little so any medics reading can get a little perspective and know what to look for in their own personal situations.

However, I must stress that every member situation will be unique and that’s where advisers like me come in as we’ll help you analyse your own personal circumstances and recommend the most appropriate solution for you.

This article will just cover the basics of the NHS pension scheme as it is now and some background of the changes that have taken place over the last few years

Let’s start with the NHS scheme changes – Along with other Public Sector pension schemes the NHS had to move away from its Final Salary pension commitment.

This happened for most members on April 2015 and impacted those that had more than 10 years to normal retirement age in April 2012.

There were transitional arrangements for those whose age put them close to that tipping point but suffice to say if you were going to be switched to the new 2015 scheme it will have happened a few years ago and you should be aware of it.

The best way to confirm your own pension situation is via this website – get registered and download your statements.

In the “old” day’s members paid a flat 6% to their NHS pension, the scheme paid the rest. With more pensioners living longer this became unfeasible and contributions increased to the current tiered system below: –



Tier  Pensionable Pay (whole-time equivalent) Contribution Rate from
2015/16 to 2018/19
 1  Up to £15,431.99   5.0%
 2  £15,432.00 to £21,477.99  5.6%
3   £21,478.00 to £26,823.99   7.1%
 4  £26,824.00 to £47,845.99  9.3%
 5  £47,846.00 to £70,630.99  12.5%
6  £70,631.00 to £111,376.99   13.5%
7  £111,377.00 and over   14.5%


As you can see most established doctors will now pay at least 12.5% to gain, the excellent, benefits of membership.

This is a big increase in cost from how things were, but I don’t think I have met a member who has complained about this and certainly none that have opted out of the scheme due to the increased contributions.

The same however cannot be said regarding opt outs due to the Lifetime and Annual allowance rules – they have caused many doctors to leave the scheme prematurely and more likely than not incorrectly after being scared by headlines of large tax charges that would be incurred.

In my next articles I will look at both issues and hopefully provide some clarity on them.

#nhs #nhspensions #doctors #surgeons #finalsalary #care #financialadvice


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