NHS Pension Contribution Rates 2026/27: Your Tier and the Real Cost
The pension line on your payslip looks expensive. After tax relief, the real cost is noticeably lower. Here is how to work it out.
Updated · 4 min read
Try it with your own numbersNHS Pension Contribution CalculatorThe NHS Pension is often the biggest deduction on a payslip after income tax, and it is the one people most often ask about. Why has my rate changed? Why do I pay more than a colleague on the same band? Is it worth staying in? This guide answers those questions with 2026/27 figures.
How the tiers work
Since October 2022, contribution rates have been based on your actual pensionable pay rather than the full-time equivalent. For 2026/27 the six tiers are:
| Actual 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% |
The thresholds rose from April 2026 in line with inflation. The rates themselves did not change.
Why part-time staff often pay less
Because the tier uses actual pay, a part-time Band 6 working 30 hours a week earns £31,967 and pays 8.3%, while a full-time colleague on the same pay point earns £39,959 and pays 9.8%. This was one of the main reasons the system changed: it used to put part-time staff in tiers based on a salary they never received.
The whole of your pay is charged at one rate
This catches people out. Unlike income tax, your contribution rate applies to all of your pensionable pay. If a pay rise takes you over a threshold, your rate goes up on every pound you earn, not just the extra.
A clear example in 2026/27 is resident doctors moving from ST3 to ST4. The salary rises by £673 a year, but it crosses the £67,669 threshold, so the contribution rate jumps from 10.7% to 12.5%. Take-home pay actually falls slightly, by around £37 a month, although the doctor is building more pension.
Tax relief: why the real cost is lower
Your contribution comes out before income tax is calculated. If you pay basic rate tax, every £100 you contribute saves £20 in tax. If you pay higher rate tax, it saves £40.
Two worked examples, full time, tax code 1257L:
- Band 5 entry (£32,073): the pension takes £221.84 a month. Tax relief is worth £44.37, so the real cost is £177.47 a month.
- Band 7 entry (£49,387): the pension takes £403.33 a month. Tax relief is worth £80.67, so the real cost is £322.66 a month.
The pension does not reduce National Insurance, because NI is charged on pay before the contribution.
What you get for it
In the 2015 scheme you build up 1/54 of your pensionable pay each year. That slice is then increased every year by inflation plus 1.5% while you are still a member. A full-time Band 6 earning £39,959 adds about £740 a year to their pension each year they work.
Your employer also pays a large contribution on top of yours, which does not come out of your pay. That is a big part of why financial advisers rarely recommend leaving the scheme to save money.
Should you opt out?
Opting out gives you more take-home pay now but loses the employer contribution, the inflation-linked growth and valuable benefits such as ill-health retirement and death in service cover. For most people that is a poor trade. If money is very tight, it is worth speaking to the NHS Pensions team or an independent adviser before deciding, and to look at the real monthly cost after tax relief, which is lower than the payslip line suggests.
Another worked example: crossing a threshold
A Band 6 working 34 hours a week on the entry point earns about £36,230, just above the £35,156 threshold, so all of her pay is charged at 9.8%. If she dropped to 33 hours, her pay would fall to about £35,163, still just in the 9.8% tier. At 32 hours, £34,098, she would pay 8.3% instead.
Small changes near a boundary can have a noticeable effect on the pension line of the payslip. It is worth checking the tier before agreeing to a change in hours, especially if you are part time.
Common questions
Is overtime pensionable? Not for full-time staff. Extra hours worked by part-time staff up to 37.5 a week are pensionable.
Are unsocial hours payments pensionable? Yes. They count towards your pensionable pay and your tier.
Can I pay more into the NHS Pension? Yes. You can buy Added Pension, either as a lump sum or through regular contributions, or pay extra to reduce the early retirement reduction in the 2015 scheme.
What if I have two NHS jobs? Each job is assessed separately, so you may be in a different tier for each.
Common mistakes to avoid
- Opting out to save money without working out the real cost after tax relief.
- Assuming your tier is based on your band rather than your actual pay.
- Forgetting that the employer contribution, which you lose if you opt out, is larger than your own.
Work out your own figures
The pension contribution calculator shows your tier, what you pay each month, the tax relief and the real cost, for any band and number of hours. To see what the pension is building up for later, try the pension at retirement estimate, and read the guide to your pension at retirement.
This guide explains the general rules for staff in England using 2026/27 figures. It is not financial advice. Your employer, payslip or NHS Pensions statement has the final word on your own pay.