Taking Your NHS Pension

When can you take your NHS pension?

The age you can take your pension in full is called your normal pension age, and it depends on which part of the scheme your benefits are in. In the 1995 section it is age 60, in the 2008 section it is 65, and in the current 2015 scheme it is the same as your State Pension age, which is currently 66 and rising to 67, and may be higher for younger members. Many longer serving staff hold benefits in more than one section, so different parts of their pension can have different normal pension ages. You can choose to take your pension before your normal pension age, from the minimum pension age, which is currently 55 and rises to 57 on 6 April 2028, but taking it early usually means a reduction. Some long serving members of the 1995 section have special class status, for example certain nurses, which can allow retirement from age 55 without the usual reduction, so it is worth checking your own position with the NHS Business Services Authority.

[FLAG FOR BUILD: confirm the current State Pension age (66 rising to 67) and the special class rules against GOV.UK and NHSBSA before publish. The minimum pension age rising to 57 in 2028 is legislated.]

Your options when you retire

When you reach the point of taking your pension, you have several choices, and you can often combine them. You can take your pension in full at your normal pension age. You can take it early, from the minimum pension age, accepting a reduction. You can take it later than your normal pension age in return for an increase. You can give up part of your annual pension for a tax-free lump sum. You can use partial retirement to draw some or all of your pension while continuing to work. And if you have to stop work because of your health, you may be able to take it early on ill-health grounds without the usual reduction. The sections below explain each option so you can see which fits your plans.

Taking your NHS pension early

You can take your pension before your normal pension age, from the minimum pension age of 55, rising to 57 in 2028. Because the pension will then be paid to you for longer, it is reduced to reflect that, an adjustment known as an actuarial reduction, and if you have a 1995 section automatic lump sum that is reduced too. The earlier you take it, the larger the reduction. If you expect to retire early from the 2015 scheme, you can arrange in advance to pay extra contributions to reduce or remove this early retirement reduction, through an arrangement called Early Retirement Reduction Buy Out, but it has to be set up well before you retire. Reductions do not usually apply if you retire early on ill-health grounds or, in some cases, through redundancy, which are treated differently.

Taking your NHS pension later

If you carry on working beyond your normal pension age, you do not lose out by waiting. Your 2015 pension is increased to reflect the fact that it will be paid for a shorter period, and while you remain an active member you also keep building new pension on the work you continue to do. This can suit people who enjoy their role or want to boost their eventual income, and it is worth weighing the larger later pension against the years of pension payments you choose not to take in the meantime.

Partial retirement, drawing your pension while you keep working

Partial retirement, sometimes called drawdown in the NHS, lets you start taking your pension without fully stopping work, which can be a useful way to ease towards retirement while keeping an income. You can take between 20 percent and 100 percent of your pension while continuing in your job, usually after reducing your pensionable pay by an agreed amount for a period, and you can keep building further pension on the work you continue to do. Recent flexibilities have made partial retirement available to members across the scheme, including those with 1995 section benefits, which previously was not possible. The exact rules, including how much you need to reduce your pay and how many times you can use it, are set by the scheme, so confirm the current terms with the NHS Business Services Authority before you plan around it.

[FLAG FOR BUILD: confirm the current partial retirement rules (minimum percentage drawn, the required pay reduction, and how many times it can be used) against NHSBSA before publish.]

Your tax-free lump sum

When you take your pension you can usually 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 the limits set by HMRC. If you have 1995 section benefits, you already receive an automatic tax-free lump sum worth three times that part of your pension, and you may be able to take a larger lump sum by giving up some pension on top. A lump sum can be appealing, but remember that giving up annual pension reduces your guaranteed income for the rest of your life, so it is a genuine trade-off rather than free money. For how the 1995, 2008, and 2015 sections differ on lump sums, see our guide at /blog/nhs-pension-schemes-explained/. Think about how much secure income you need before deciding how much to convert. Read our full guide to the NHS pension lump sum at /blog/nhs-pension-lump-sum-uk/.

Ill-health retirement

If you become permanently unable to work because of your health, you may be able to take your pension early on ill-health grounds, without the reduction that normally applies to early payment. There are two levels. The lower tier applies if you are permanently incapable of doing your own NHS job, and pays your pension built up so far, brought into payment early. The higher tier applies if you are also permanently incapable of any regular employment, and pays an enhanced pension that includes an addition for some of the service you would have built up. The criteria are strict and are assessed by the scheme's medical advisers, and you can apply while you are still employed. Given the complexity, it is worth getting support from your employer and the NHS Business Services Authority when making a claim.

What happens to your NHS pension when you die

The scheme provides for your family as well as for you. If you die while still working and paying in, a lump sum is usually payable, commonly a multiple of your pay, along with an ongoing survivor pension for a spouse, civil partner, or qualifying partner, and pensions for dependent children. If you die after you have retired, a survivor pension is normally paid, and if your death happens within a guarantee period after retirement, a further lump sum may be due. It is important to keep a nomination form up to date with the NHS Business Services Authority so that any lump sum can be paid to the person you choose.

[FLAG FOR BUILD: confirm the death in service lump sum multiple and the post-retirement guarantee period against NHSBSA before publish.]

How to estimate and claim your NHS pension

Before you decide anything, ask the NHS Business Services Authority for a retirement estimate, or check the figures shown on your annual Total Reward Statement, which sets out the benefits you have built up. When you are ready, you normally apply a few months before the date you want your pension to start, through your employer and the NHS Business Services Authority. For a step-by-step guide to claiming, including the AW8 form and timing, see our guide at /blog/claiming-nhs-pension-uk/. To get a sense of the pension you are on track for, use our NHS pension contribution calculator at /nhs/pension-contribution-calculator/, and to understand what you pay in along the way, see our guide to NHS pension contributions at /blog/nhs-pension-contributions-uk/. For the bigger, irreversible decisions, such as how much lump sum to take or whether to retire early, regulated financial advice is well worth considering. For how the scheme works overall, see our full guide to the NHS Pension Scheme at /blog/nhs-pension-scheme-uk/.