Everyone in the NHS has to pay towards a pension. The NHS will also contribute. If you do not want a pension with the NHS you have to opt out. This is done by contacting the pensions department. The date you can retire depends on your State Pension Age. This is different depending on when you were born. NHS Pension contributions are taken before Tax and National Insurance is calculated and deducted.

**NHS Pension contributions are changing**. In August 2022 letters were sent out to NHS Pension members explaining the changes. To help NHS Pension members adapt the changes have been split into two phases. One change on the 1st October 2022 and another will be announced shortly after considering the new 5% pay award.

Earnings from | Earnings to | Oct 1st 22 | Possible (TBC) Apr 1st 23 | |
---|---|---|---|---|

£000 | £13,231.99 | 5.1% | 5.2% | |

£13,232 | £16,831.99 | 5.7% | 6.5% | |

£16,832 | £22,878.99 | 6.1% | 6.5% | |

£22,879 | £23,948.99 | 6.8% | 6.5% | |

£23,949 | £28,223.99 | 7.7% | 8.3% | |

£28,224 | £29,179.99 | 8.8% | 8.3% | |

£29,180 | £43,805.99 | 9.8% | 9.8% | |

£43,806 | £49,245.99 | 10% | 10.7% | |

£49,246 | £56,163.99 | 11.6% | 10.7% | |

£56,164 | £72,030.99 | 12.5% | 12.5% | |

£72,031 | £Infinity | 13.5% | 12.5% |

For example, a person on the first pay point of a Band 5 earns £27,055 a year. Before these changes they paid 7.1% pension contributions. From the 1st October 2022 they will pay 7.7% and from 1st April 2023 it is proposed that they pay 8.3% towards their pension.

A person on the first pay point of a Band 2 paid 5.6% towards their pension before the changes. They will now pay 6.1% from October 2022 and 6.5% from 1st April 2023. This is just under 1% more than previously.

Anyone earning over £72,031 (a Band 8C) used to pay 13.5% pension contribution before the changes. They will now pay 12.5% from 1st April 2023. This means that they will pay 1% less than before.

For those who are paying more towards their pension, there will be additional tax relief. However, the actual net pay will be reduced due to the additional pension contributions.

There are three types of NHS Pension. You are either on the new one (2015) or a mixture of the new and old ones (1995 and/or 2008). People who had 10 years or less before retirement were allowed to stay on the older pension (either 1995 or 2008). The contribution taken is the same whichever pension you are on.

This is a final salary pension that you are able to take from the age of 60 (sometimes sooner if you have special status, for example the Mental Health Act status allows you to retire at 55). It is calculated by dividing your current salary by 80, multiplying by the number of days you have worked/earned and then dividing that figure by 365 (the number of days in a year). This will give you the amount of pension you will be given every year from the date you retire until the day you die.

Pete has worked for the NHS for 20 years (which is 7,305 in days). His current salary is £80,000 a year. If Pete wanted to get an idea of what his pension might be, he would start by dividing the £80,000 by 80. This would give £1,000. Then he would multiply the £1,000 by 7,305 (the number of days he has worked) and finally divide that number by 365.25 (which is the amount of days in a year). Pete worked out that his annual pension would be around £20,000 a year, which is around £1,666.00 a month. He thinks his calculations are correct, he knows they are approximate and he will double check with a trained NHS pension advisor from work.

With the 1995 pension you are also entitled to a one off lump sum. This is usually three times your calculated pension. In the example above the lump sum would be approximately £60,000.00.

The 2008 NHS pension is very similar to the 1995 NHS pension in that it is also based on your salary. The 2008 uses the best salary from the last 10 years, rather than your final salary.

There is no lump sum with the 2008 Pension, but the calculation is 1/60th rather than 1/80th which will give you a larger amount. You are able to take part of your calculated Pension as a lump sum.

If Pete was on the 2008 pension and wanted to get an estimate of what his Pension would be, he would start by dividing the £80,000 by 60. This gives £1,333.00. Then he would multiply £1,333 by the number of days he has worked (7,305). Then divide this number by 365. This gives an annual amount of £26,684.93 or £2,223.74 a month. Although this is a higher amount, there is no lump sum with the 2008 NHS Pension. However, you can reduce your annual salary in order to have a lump sum on retirement.

This calculation is assuming that the £80,000.00 yearly salary, that Pete is using, is his best annual salary over the last 10 years.

The other difference is that the 2008 Pension does not mature until 65, which means that Pete would have to wait another 5 years to get his full Pension.

The 2015 Pension is based on what you earn each year. Every year, 1/54th of your annual salary, is put into your Pension pot. You canâ€™t retire until you are at State Pension Age. The State Pension Age is currently different depending on how old you are. It varies from 66 to 68 depending on the date you were born.

If Pete, discussed above earned £80,000 for every year that he worked those 20 years in the NHS he would have £29,629.63 for his annual pension (this is £80,000.00 divided by 54 and multiplied by 20). This is purely an example. It is very unlikely that Pete would earn the same amount every year. Also the 1/54th added each year is re-valued in line with the Consumer Price Index (CPI) with an extra 1.5% on top. This just means it keeps up with inflation.

The 2015 Pension does not have a lump sum, but you can opt to take part of your pension as a lump sum.

Everyone who works in the NHS gets a death in service benefit. This means that if you die whilst working for the NHS (i.e. not retired) your annual salary (multiplied by 2) is payable after you die to your spouse, partner, legal representative or whoever else you have nominated. This is a form of life insurance for most people working in the NHS.