NHS pension advice

Frequently Asked Questions

What happens if I exceed the NHS pension annual allowance, and how can I manage the tax charge?

If your NHS pension growth exceeds your available annual allowance, you may have an annual allowance tax charge. In some cases, NHS Pensions can pay some or all of that charge to HMRC through Scheme Pays, subject to the scheme rules and deadlines. If you also have other pensions, your overall tax position should be reviewed carefully, as the annual allowance applies across all registered pension schemes. You may also be able to pay the tax charge from your other pensions. It is usually sensible to take advice before deciding how any charge should be paid.

Can I take my NHS pension and continue working (retire and return or partial retirement)?

Yes. Depending on your circumstances, you may be able to keep working while drawing NHS pension benefits through partial retirement or retire and return. Partial retirement allows eligible members to take some or all of their pension benefits while continuing in NHS employment, usually with at least a 10% reduction in pensionable pay for at least 12 months. Retire and return usually involves retiring, taking a short break from NHS employment, and then returning on a new contract, subject to employer agreement and scheme rules.

Should I take a lump sum from my NHS pension, and how does it affect my income?

Yes, many members can exchange part of their pension for a larger lump sum at retirement. However, the rules differ depending on which section or scheme you are in. For example, the 1995 Section usually includes an automatic lump sum, while the 2008 Section and 2015 Scheme do not usually provide one automatically, although members can normally convert part of their pension into lump sum. Taking a larger lump sum will reduce your pension for life, so it is important to consider the long-term impact before making a decision.

How does inflation (CPI) affect my NHS pension in retirement?

Pension increases help protect the value of NHS pension benefits against inflation, but how they apply depends on whether you are retired, deferred or still building benefits. Pensions already in payment and deferred pensions are generally increased each year in line with the relevant public service pensions increase based on the Consumer Prices Index (CPI). If you are still an active member building benefits in the 2015 Scheme, different revaluation rules apply to those benefits while you remain in service.

How will the McCloud remedy affect my NHS pension and retirement decisions?

The NHS age discrimination remedy, often called the McCloud remedy, may affect some members who had pension service during the remedy period from 1 April 2015 to 31 March 2022. If you are affected, you will usually be given a choice about whether pension benefits for that period are treated under the legacy 1995 or 2008 section, or the 2015 Scheme, when your benefits are taken. The impact is different for each member and can affect pension income, tax and retirement decisions, so it is important to review your position carefully when you receive your remedy information. The McCloud Remedy may also impact your annual allowance position. 

What is NHS partial retirement, and when can I use it to reduce my hours?

Partial retirement allows eligible members to take between 20% and 100% of their NHS pension benefits while continuing to work in the NHS. You do not usually need to leave your job, but you normally need your employer’s agreement and must reduce your pensionable pay by at least 10% for at least 12 months. You can continue building pension benefits in the 2015 Scheme after taking partial retirement, subject to the scheme rules. It can be a useful option for members who want to reduce their workload gradually while starting to draw pension income.

Disclaimer: NHS pension rules, tax legislation and HMRC guidance can change over time. The information on this page is intended as a general guide only and should not be relied on as personal financial or tax advice. The options available to you and the impact on your benefits can vary depending on your individual circumstances, so it is important to check the latest NHS Pensions guidance and take professional advice where needed.