How Much Will My NHS Pension Be? Estimating Your Pension at Retirement

For most NHS staff, the pension will be their biggest financial asset after their home. Yet many people have only a vague idea of what it will pay. The good news is that the 2015 scheme follows a simple rule, so you can make a reasonable estimate with a few numbers.

How the 2015 scheme builds your pension

The 2015 scheme is a career average scheme. Each year you are a member:

1. You earn 1/54 of that year's pensionable pay as pension.
2. That slice is added to your pension pot.
3. While you are still a member, everything you have built up is increased every April by inflation (the Consumer Prices Index) plus 1.5%.

So a full-time Band 6 earning £39,959 adds about £740 a year to their pension for that year alone. The extra 1.5% above inflation is what makes the scheme so valuable over a long career: earlier years keep growing faster than prices.

Why we talk in today's money

If you project a pension 30 years ahead in future pounds, the number looks enormous but means little, because prices will have risen too. A clearer approach is to strip out inflation and look at the figure in today's money. Then the growth that counts is the 1.5% a year above inflation, plus any real pay rises you get from promotions.

A worked example

Take a full-time Band 6 aged 37 on £39,959 who joins the 2015 scheme now and works another 30 years. If their pay rises by 1% a year above inflation, from moving up pay points and bands, the estimate is a pension of about £31,850 a year in today's money.

That figure does not include the State Pension, which is paid on top, or any earlier NHS service in the 1995 or 2008 sections.

When you can take it

In the 2015 scheme, your normal pension age is the same as your State Pension age, or 65 if that is later. For most people working now that means 67, and 68 for younger staff. You can take your pension earlier, from age 55 (rising to 57), but it is reduced to reflect the longer time it will be paid. The pension age guide sets out the dates.

Taking a lump sum

At retirement you can give up some of your yearly pension in exchange for a tax-free lump sum. In the 2015 scheme, each £1 of yearly pension you give up gives you £12 of cash. The lump sum guide shows how much you can take and how long it takes to make back.

What can change the final figure

• Breaks in service: time out of the scheme, career breaks or opting out reduce what you build.
• Part-time years: you build pension on what you actually earn, so part-time years add less.
• Buying more: you can buy Added Pension to increase your pension, or pay to retire early without a reduction.
• Older sections: if you were in the 1995 or 2008 sections before 2015, those benefits are worked out differently and added on top.

Your annual benefit statement

NHS Pensions sends every active member an annual benefit statement through the Total Reward Statements service. It shows your pension built up so far, which you can enter into our calculator to make your estimate more accurate.

What your annual benefit statement tells you

Your Total Reward Statement includes an annual benefit statement showing the pension you have built up so far in each section, usually as at the previous 31 March. Use the 2015 scheme figure as your starting point in our calculator, and remember that older sections are worked out differently and should be added separately.

Common questions

Is the NHS Pension index linked once it is paid? Yes. Pensions in payment are increased each year in line with inflation.

What happens to my pension if I leave the NHS? You keep what you have built up. It is increased each year with inflation until you take it, but it no longer gets the extra 1.5%.

Can I transfer in other pensions? In some cases, yes, within time limits. Ask NHS Pensions before you transfer, as it may not be worthwhile.

Is there a lump sum? In the 2015 scheme you can swap pension for a tax-free lump sum at £12 for each £1 of yearly pension. The 1995 section gives an automatic lump sum.

Common mistakes to avoid

• Reading a future pension figure without adjusting for inflation.
• Forgetting older section benefits, which can be a large part of the total for long-serving staff.
• Opting out during a tight financial period and not rejoining, which leaves gaps that are hard to fill later.

Make your own estimate

The pension at retirement calculator takes your band, hours, age, planned retirement age and any pension already built up, and estimates your yearly pension in today's money, with or without a lump sum. To see how much your contributions cost now, try the pension contribution calculator.