What the NHS Pension Scheme Is

The NHS Pension Scheme is the workplace pension for people who work in the NHS across the UK. It is a defined-benefit, career-average (CARE) scheme: your retirement income is guaranteed and rises with inflation, set by your earnings and years of membership rather than investment returns.

Almost everyone employed by the NHS is automatically enrolled, including Agenda for Change staff, hospital doctors and consultants, and more.

You and your employer both pay in, with the employer contributing the larger share. Your own contributions are deducted from your salary each month, and the rate you pay depends on your actual annual pensionable pay.

Contribution Tiers (2026/27)

The NHS Pension Scheme uses six tiers. Your tier is based on your whole pensionable pay, not just the portion in a particular band. Moving to a higher pay point can push you into a higher tier, increasing the percentage deducted from every pound you earn.

TierPensionable PayRate
1Up to £13,2595.2%
2£13,260 – £28,8546.5%
3£28,855 – £35,1558.3%
4£35,156 – £52,7789.8%
5£52,779 – £67,66810.7%
6£67,669 and above12.5%

Source: NHSBSA member contributions

What Your Employer Pays

Your tier is only part of the cost. On top of it, your employer pays a larger share straight into the scheme. In England and Wales that is 23.7% of your pensionable pay, plus a 0.08% admin charge, 23.78% in all.

23.7%

Employer contribution on top of your tier (England & Wales)

That is roughly three times what most members pay. You never see it on your payslip, and it is not taken from your pay. It is extra money paid in alongside your own contribution. If you opt out, you forgo this employer share as well as your own pension accrual.

Scotland and Northern Ireland run their own NHS schemes with their own employer rates: 22.5% through the SPPA in Scotland, and 23.2% through HSC Pensions in Northern Ireland.

Source: NHSBSA employer contribution rates (from 2024/25; set by scheme valuation).

NET Pay Arrangement

The NHS Pension Scheme uses a NET pay arrangement. Your contribution is the tier rate applied to your pensionable pay: your basic salary plus any pensionable allowances, which can be less than your total gross pay. It’s taken off before income tax is worked out, so you get full tax relief automatically through your payslip.

National Insurance is still calculated on your full gross pay before pension. This is a key difference from salary sacrifice, where both tax and NI are reduced. Under the national terms and conditions, salary sacrifice is not available for most NHS staff on standard AfC contracts.

How This Affects Take-Home Pay

Two people on the same gross salary can have different pension deductions if they fall into different tiers. A Band 5 nurse at the top pay point crosses into a higher tier than one at the bottom, paying a larger percentage on their entire salary.

Since October 2022, part-time staff pay the tier rate based on their actual pensionable pay, not the whole-time equivalent. Use the calculator to see exactly how your pension tier affects your monthly take-home. It models Agenda for Change pay, so the figures are exact for AfC staff. On another NHS contract you can still use it. Choose Custom and enter your own gross salary.

Beyond the NHS Pension

The NHS Pension is one layer of retirement saving, but some staff choose to save more. If your employer offers salary sacrifice for additional pension contributions, both you and your employer save on National Insurance, and our take-home and pension calculator can model this.

You can also contribute to a SIPP or other private pension alongside the NHS scheme, as long as your total pension growth stays within the Annual Allowance.

Frequently Asked Questions

Your NHS Pension contributions already get full tax relief automatically through the NET pay arrangement. If you also pay into a private pension and you’re a higher-rate taxpayer, you can claim extra relief from HMRC, but it’s not automatic. Basic rate relief is added by your provider; the additional 20% must be claimed via Self Assessment or by contacting HMRC directly.

Opting out means forfeiting your employer’s contribution (currently 23.7% of your pensionable pay in England and Wales) and giving up a guaranteed, inflation-linked income in retirement. Matching that pension through a private defined-contribution pot would take a large amount of personal saving. Opting out raises your monthly take-home pay; people opt out for cash-flow reasons or when leaving the NHS. Use the calculator to compare take-home with and without pension.

Your benefits are preserved as deferred benefits. They continue to be revalued each year in line with inflation, so the real value is maintained even while you are not contributing. You can claim them from your normal pension age regardless of where you work afterwards. If you return to the NHS within five years you may be able to rejoin the scheme and link your service.

Yes, but your annual pension is reduced to account for the longer period it will be paid. The minimum pension age is 55 for 2015 scheme members (rising to 57 in 2028). The reduction depends on your scheme and how many years early you take it. It is applied permanently to every payment for the rest of your life. The cross-over point against your expected retirement age sets the long-term impact.

The Annual Allowance (£60,000 from 2023/24) caps the total pension growth allowed across all your schemes in a tax year. To find your NHS pension growth, you need a Pension Savings Statement from NHSBSA, not your ESR Total Reward Statement. The TRS shows a snapshot of your benefits, not the start-of-year and end-of-year values the calculation requires. NHSBSA issue a statement automatically if your growth exceeds the allowance. If it does not, request one through the NHSBSA member hub. You can also carry forward unused allowance from the previous three tax years, and under the McCloud remedy (from April 2023) negative growth in the 1995/2008 legacy scheme can offset positive growth in the 2015 scheme within the same year. Whatever headroom remains after your NHS pension growth is the amount you can contribute to a SIPP or other private pension without triggering a tax charge.
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