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Understanding Your NHS Pension

We speak to IFA Maryam Butt of Chase De Vere to bring you the answers about your NHS pension.

The NHS Pension Scheme is a highly complex system. Errors within pension records are unfortunately common, and many of those who pay into the scheme have questions surrounding the accuracy and benefits of their pension.

BW Medical Accountants speaks to Independent Financial Adviser Maryam Butt from Chase De Vere Medical to bring you the answers to your frequently asked questions about the NHS Pension Scheme.

Our NHS Pension Management Service can offer further assistance when it comes to your pension record and identify any issues.

Why has my NHS pension gone down?

There are several reasons why your NHS pension may have gone down. Maryam reveals that these reasons may include, but are not limited to:

  • a reduction in your pensionable pay
  • negative inflation
  • taking your NHS pension earlier than your retirement age
  • taking an increased pension lump sum
  • opting out of the scheme
  • a pension sharing order
  • allocating your pension to a beneficiary.

If your pension has gone down but you don’t believe any of the above apply to you, Maryam recommends contacting your independent financial adviser to discuss your individual circumstances.

How many hours can you work after taking your NHS pension?

As of 1st April 2023, there are no restrictions on the number of hours that you can work after taking your NHS pension.

This change applies to all members, regardless of which scheme you belong to: 1995/2008 or 2015.

Maryam explains: “1995 scheme members who had already accessed their benefits may remember the previous 16-hour rule. Members could only work up to 16 hours in the first calendar month after their retirement – otherwise, their pension payments would be affected.

“This rule has now permanently been removed and 1995 scheme members can now work as many hours as they choose after accessing their benefits.”

Should I buy any additional NHS pension?

If you’re considering buying additional NHS pension benefits, Maryam advises seeking trusted financial advice. She explains: “This decision will depend on your personal financial circumstances and there is no one-size-fits-all answer.”

Maryam reveals you should always consider:

  • your current financial position and whether you can currently afford additional contributions
  • your retirement income goal
  • whether you require dependants’ benefits
  • whether you require a guaranteed income with inflation protection
  • alternative options, including Individual Savings Accounts (ISAs), investment plans, private pensions, stakeholder pensions and additional voluntary contributions (AVCs).

The above factors do not constitute an exhaustive list and you should always seek independent financial advice before making a final decision.

Is the NHS pension index-linked?

Yes, the NHS pension is index-linked. Maryam explains, “This means the NHS Pension Scheme is protected against inflation.”

She continues, “This means that your pension increases annually to keep pace with the rising cost of living.

“The increase is based on the Consumer Price Index (CPI). The annual increase is calculated based on the CPI from September to September in the previous year.”

Should I transfer my NHS pension into my private pension?

You cannot directly transfer your NHS pension into your UK-based private pension.

Maryam explains: “The NHS Pension Scheme operates differently to private pensions and only allows for direct transfers in or out in certain circumstances.

“For instance, the NHS Pension Scheme does allow transfers under certain conditions, such as transfers between corresponding health service schemes and other public sector schemes.” 

Other transfers maybe possible. However, Maryam reiterates that this is a complex financial decision and that consulting with an independent financial adviser is always highly recommended.  

How does a break in service affect my NHS pension?

The answer to this question will vary, depending on which scheme you are in. Click here 

1995/2008 schemes

If your break in service lasts for less than five years, you won’t lose any accrued pension benefits or your final salary link.

Maryam explains: “Your pension will continue to accrue based on your previous salary when you return to the NHS. If you are a GP, your pension will continue to accrue at CPI+1.5%.

If your break in service lasts for more than five years, your pension will accrue based on your pensionable salary when you left the NHS.

“You won’t lose any accrued benefits,” Maryam comments, “but they will only increase in line with CPI. This is also true if you’re a GP.”

As a member of the 1995/2008 scheme, on rejoining the NHS after a break of five years you will be given the opportunity to transfer your previously accrued NHS pension into the new scheme.

2015 scheme

In this scheme, your pension is based on your career average earnings. 

Maryam explains, “Your benefits will accrue at CPI during a break, as opposed to CPI+1.5% as an active contributing member of the scheme. After a break of five years or more your pension will be deferred and will only increase by CPI. This applies up until the moment you draw your pension.

“After you draw your benefits, the pension in payment will then increase at CPI only.”

There are some additional rules for those members who take permanent career breaks.

Can I freeze my NHS pension while on maternity leave?

You can stop your NHS pension contributions while on maternity leave.

However, Maryam comments, “If you continue with your contributions, your pension scheme membership and pension benefits are protected during your maternity leave.”

Maryam explains how the system works:

“Your employer continues to make pension contributions throughout your maternity leave, based on your pre-maternity leave salary. This will include periods of full pay, statutory maternity pay and unpaid leave.

“Your pension contributions, at the tier you were paying before the leave, will be deducted on the amount of pensionable pay, reckonable pay or pensionable earnings you actually receive during the leave. If you stop payments, then the contributions will be based on the amount of pensionable pay, reckonable pay or pensionable earnings you were receiving immediately before you stopped payments.

 “Your pension benefits will continue to accrue, based on your pre-maternity leave salary. Even if your leave is unpaid, you will earn pensionable service for the full duration.”

Taking maternity leave will not negatively impact your final pension amount or your retirement benefits.

How safe is my NHS pension?

The NHS Pension Scheme is considered a very safe option, offering several assurances for its members. 

Maryam explains, “Arguably, the most important assurance is the fact that the scheme is government-backed.

“This backing adds a significant layer of security and reduces the risk of insolvency.”

Does the NHS have a death-in-service benefit?

Yes, however the benefits will vary depending on which scheme you belong to.

Maryam explains that “you must be an active member of the NHS Pension Scheme and contributing at the time of your death in order for your beneficiaries to receive enhanced benefits. If you are not a member when you die, death benefits are still paid, but these benefits will be considerably less than if you were to die as an active member.”

The amount to be paid out will depend on several factors, including your salary, scheme section and length of service.

Maryam continues: “If you are an actively contributing member of the scheme at the time of your death, your beneficiaries will typically receive a lump sum. This sum will be equal to twice your relevant earnings for the last 12 months, or your revalued earnings of the last 10 years – whichever is higher.”

Is the NHS pension worthwhile after 20 years of service?

This is a complex question that depends on several factors unique to an individual’s circumstances and financial goals.

Maryam comments, “For the vast majority of NHS employees, membership is recommended. However, if you’re in any doubt, always seek financial advice from a trusted source.”

Need more support?

If you still have questions when it comes to your NHS pension record, always seek trusted financial advice. Any decisions in relation to your NHS Pension Scheme should only be made after full consideration of all of the variables.

BW Medical’s NHS Pension Management Service can help to weed out any errors in your pension record and help to ensure the accuracy of your benefits. Get in touch with our team to discuss your specific needs.

Disclaimer: This article should not be deemed as personal financial advice and should be used as guidance only.

Author: Maryam Butt is a dedicated and knowledgeable Independent Financial Adviser with over 10 years of experience in the industry.

Maryam is proud to be part of the team at Chase De Vere Medical. She works with partner BW Medical Accountants to provide holistic financial advice to NHS professionals.

She has expertise in advising clients when it comes to the NHS pension, investments, financial protection, mortgages and estate planning. Maryam also has a thorough understanding of pension tax issues and the annual allowance, including tapering.

Maryam is committed to helping clients achieve their financial goals by building comprehensive financial plans tailored to their specific needs and circumstances.

If you’re looking for financial advice, please contact Maryam on 07894 619 817 or email to arrange a complimentary initial chat. The Financial Conduct Authority does not regulate tax planning or estate planning.

Please note that the value of your investments can go down as well as up, so you could get back less than you invested.

The information contained within this article is based on our understanding of legislation – whether proposed or in force – and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.

Julie Mudditt

Julie Mudditt

NHS Pensions Manager

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