What is the NHS Pension Scheme?
The NHS Pension Scheme is the workplace pension for people who work in the NHS in England and Wales, and it is one of the most valuable pensions available to any UK employee. It is a defined benefit scheme, so the pension you receive is set by a formula based on your pensionable pay and your years of membership, not by a pot of money exposed to the stock market. It is administered by the NHS Business Services Authority and backed by the government, which makes the promised benefits very secure. Most NHS staff are enrolled automatically when they start work. You can choose to opt out, but doing so means giving up the large employer contribution, so it is rarely a good idea.
How the 2015 CARE scheme works
Since 1 April 2022, all active members build their pension in the 2015 scheme, which is a career average revalued earnings scheme, usually shortened to CARE. Each scheme year you earn a slice of pension worth 1/54 of your pensionable pay for that year. For example, on pensionable pay of £30,000 you would build £555 of annual pension in that single year, because £30,000 divided by 54 is £555. Those slices are added together over your whole career to give your total pension. To protect their value against rising prices, the slices you have already built are increased each year while you are still working, by the Consumer Prices Index plus 1.5 percent. The age at which you can take this pension in full, known as your normal pension age, is the same as your State Pension age.
The 1995 and 2008 sections and the McCloud remedy
Before 2015, NHS staff were in one of two final salary sections. The 1995 section paid a pension of 1/80 of final salary for each year of membership, plus an automatic tax-free lump sum of three times that pension, with a normal pension age of 60. The 2008 section paid 1/60 of final salary for each year, with a normal pension age of 65 and no automatic lump sum. Many longer serving staff still hold benefits in these sections. Following a legal ruling known as McCloud, which found that the move to the 2015 scheme had discriminated against younger members, affected members can choose, when they retire, whether their service between 1 April 2015 and 31 March 2022 is treated as legacy section benefits or 2015 scheme benefits. From 1 April 2022 onward, everyone builds new benefits in the 2015 scheme.
How much you contribute
You pay a percentage of your pensionable pay into the scheme each month, and the percentage rises in tiers as your pay increases. The rate is based on your actual annual pensionable pay. For the year from 1 April 2025 to 31 March 2026, the tiers are as follows.
| Pensionable pay | Contribution rate |
|---|---|
| Up to £13,259 | 5.2% |
| £13,260 to £28,854 | 6.5% |
| £28,855 to £35,155 | 8.3% |
| £35,156 to £52,778 | 9.8% |
| £52,779 to £67,668 | 10.7% |
| £67,669 and above | 12.5% |
Because your contributions come out of your pay before income tax, you receive tax relief at your highest rate, so the real cost to you is lower than the headline percentage. The pay ranges are reviewed and usually increased each April in line with the NHS pay award, so always check the latest bands before relying on a figure. You can see what your own contribution and pension look like with our NHS pension contribution calculator at /nhs/pension-contribution-calculator/.
[FLAG FOR BUILD: confirm these six pay thresholds against the current NHSBSA "cost of being in the scheme" page before publish, as they uprate each April. The percentage rates are the scheme structure.]
What your employer pays
One of the biggest advantages of the NHS scheme is the employer contribution. Your NHS employer pays around 23.7 percent of your pensionable pay into the scheme on your behalf, plus a small administration charge, which is far more than the minimum employer contribution required in most private sector pensions. This is effectively a large, tax-free addition to your overall reward package, and it is a key reason the scheme is so valuable even for staff on modest salaries.
[FLAG FOR BUILD: confirm the current employer contribution rate on NHSBSA before publish.]
What you get when you retire
At retirement your annual pension is the total of all the slices you have built, after revaluation. You can normally take it in full from your normal pension age, take it earlier from the minimum pension age (currently 55, rising to 57 in 2028) with a reduction because it will be paid for longer, or take it later than your normal pension age in return for an increase. You can also give up part of your annual pension in exchange for a tax-free lump sum, at a rate of £12 of lump sum for every £1 of annual pension you give up, within HMRC limits. If you hold 1995 section benefits, you already receive an automatic lump sum of three times that part of your pension. The scheme also provides survivor pensions for a spouse, civil partner, or dependants, and ill-health retirement benefits if you have to stop work because of your health. You can read more about lump sum rules in our guide at /blog/tax-free-lump-sum-uk/.
Partial retirement and flexible options
You do not have to stop working to start taking your NHS pension. Partial retirement lets you claim some or all of your pension while continuing to work, usually after a small reduction in your hours or pay, which can be a useful way to ease towards full retirement while keeping an income. In some circumstances you can also keep building new pension after taking benefits. The rules are detailed, so it is worth requesting an estimate from the NHS Business Services Authority before making any decision.
Tax and the annual allowance
Your pension savings receive generous tax relief, but there is a limit on how much your pension can grow each year with that relief, called the annual allowance, which is £60,000 for most people. For a defined benefit scheme like the NHS one, what counts towards the allowance is the growth in the value of your pension over the year, not the contributions paid in. Most members stay well within the allowance, but higher earners, and those who receive a large pay rise or buy extra pension, can exceed it, and very high earners may have a reduced, tapered allowance. If you think you might be affected, read our guide to pension tax relief at /blog/pension-tax-relief-uk/ and consider professional advice. The NHS scheme also connects to the wider NHS pay structure, which you can explore through our guide to Agenda for Change pay bands at /blog/agenda-for-change-explained/.
General information, not financial advice
This guide explains how the NHS Pension Scheme works. It is general information, not financial advice. Scheme rules, thresholds and employer rates change. Confirm current figures on NHSBSA and consider independent advice before opting out or planning retirement.Related Calculators
Frequently Asked Questions
The NHS Pension Scheme is a defined benefit pension, so your retirement income is set by a formula rather than by investment returns. In the current 2015 scheme you build pension worth 1/54 of your pensionable pay each year, those amounts are increased each year to keep pace with prices, and you can take the total as an annual pension from your normal pension age, which matches your State Pension age.
You pay a tiered percentage of your pensionable pay, ranging from 5.2 percent on the lowest band to 12.5 percent on the highest for 2025/26. The rate is based on your actual annual pensionable pay, and because contributions are taken before income tax you receive tax relief, so the real cost is lower than the headline rate. The pay bands are usually updated each April.
CARE stands for career average revalued earnings. Instead of basing your pension on your final salary, the 2015 scheme adds a slice of pension each year worth 1/54 of that year's pensionable pay, and increases the slices you have already earned by the Consumer Prices Index plus 1.5 percent while you remain an active member. Since 1 April 2022 all active NHS staff build benefits this way.
These were the older final salary sections, paying 1/80 of final salary per year with an automatic lump sum in the 1995 section, or 1/60 per year in the 2008 section. Members moved into the 2015 scheme for future service, and following the McCloud ruling, anyone affected can choose at retirement whether their service from April 2015 to March 2022 counts in their old section or the 2015 scheme.
Your employer pays around 23.7 percent of your pensionable pay into the scheme, plus a small administration charge. That is significantly more than the minimum required in most private pensions, and it is a major reason the NHS scheme is considered so valuable, since it is effectively a large addition to your pay that you do not have to fund yourself.
You can take it in full from your normal pension age, which is the same as your State Pension age. You can take it earlier, from the minimum pension age of 55, rising to 57 in 2028, with a reduction because it will be paid for longer, or later in return for an increase. Partial retirement also lets you draw your pension while continuing to work.
Yes. You can exchange part of your annual pension for a tax-free lump sum, receiving £12 of lump sum for every £1 of yearly pension you give up, within HMRC limits. If you have 1995 section benefits, you already get an automatic tax-free lump sum worth three times that part of your pension.
Yes. The growth in the value of your NHS pension each year is tested against the £60,000 annual allowance. Most members are well within it, but a large pay rise, buying added pension, or a very high income, which can reduce the allowance through tapering, may push you over, in which case a tax charge can apply.
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James Hartley is a Chartered Management Accountant (CIMA) with more than eight years of experience in UK tax, payroll and compliance. He holds a BSc in Finance and Economics from the University of Manchester and spent his early career at a Big 4 accounting firm. He founded WhatsUK to build free UK financial calculators and guides verified against official HMRC sources. He authors every calculator and article on WhatsUK.
Sources & Official References
- NHS Business Services Authority, cost of being in the scheme (member contribution tiers)- Last verified 23 June 2026
- NHS Business Services Authority, scheme structure and the 2015 CARE scheme- Last verified 23 June 2026
- NHS Business Services Authority guidance on the annual allowance- Last verified 23 June 2026
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Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.