Comparing the different sections of the NHS Pension Scheme

1995 Section

• Members can take their pension any time between the ages of 55-75, with some members able to take their pension from age 50. 
• Pension will be reduced if it is taken before the age of 60. Members with special class status or mental health officer status can take their pension without it being reduced from age 55. 
• Members can continue to work beyond age 60 without claiming their pension. If members choose to do this, any additional years' service will contribute towards growing their pension. 
• If pension is taken after age 60, it will not be further increased for late payment (late retirement factors).

2008 Section

• Members can take their pension at any time between the ages of 55-75.
• Pension will be reduced if it is taken before the age of 65. 
• Members can continue to work beyond age 65 without claiming their pension. If members choose to do this, any additional years’ service will contribute towards growing their pension.
• If pension is taken after age 65, it will be further increased for late payment (late retirement factors).

2015 Scheme

• Members can take their pension at any time between the ages of 55-75.
• Pension will be reduced if it is taken before state pension age.
• Members can continue to work past state pension age without claiming their pension. If members choose to do this, any additional years’ service will contribute towards growing their pension.
• If pension is taken after state pension age, it will be further increased for late payment (late retirement factors).

1995 Section

A member's pension is calculated using:

• Salary - The highest pensionable earnings in a single year, taken from the last three years of their service. 
• Service - The number of years of membership built up in the scheme. (Members who have worked part time will have built up fewer years of service. For example, an individual working 50 per cent of standard full-time hours for 20 years will have 10 years’ service counting towards their pension calculation.)
• Accrual rate - The rate at which pension builds up in the 1995 section is 1/80.

Annual pension from the 1995 section is calculated using the following equation: 

Salary x Service x Accrual rate = Annual pension in retirement

2008 Section

A member's pension is calculated using:

• Salary - The average of the three consecutive years with the highest pensionable earnings, taken from the last ten years of their service.
• Service - The number of years of membership built up in the scheme. (Members who have worked part time will have built up fewer years of service. For example, an individual working 50 per cent of standard full-time hours for 20 years will have 10 years’ service counting towards their pension calculation.)
• Accrual rate - The rate at which pension builds up in the 2008 section is 1/60.

Annual pension from the 2008 section is calculated using the following equation:

Salary x Service x Accrual rate = Annual pension in retirement

2015 Scheme

The amount of annual pension from the 2015 Scheme is worked out for each year individually and built up over a career. This process is shown in the following three steps:

1. The pension built up over each year is calculated: 

Salary x Accrual rate = Pension built up over one year

• Salary - Pensionable earnings from a single year.
• Accrual rate - The rate at which pension builds up in the 2015 Scheme is 1/54.

2. The pension from all previous years is increased and added in to show the pension built up over the member’s career so far: 

Pension built up in one year x Increased pension from previous years = Pension built up over career so far

• Increased pension from previous years -  All pension built up over previous years, increased by CPI + 1.5%.

3. This process is repeated for each year of service up until retirement.

1995 Section

• At retirement, members automatically receive a tax-free lump sum equivalent to three times their annual pension.
• Members also have the option to exchange part of their pension for more cash, up to a maximum of 25 per cent of the total value of their pension.

2008 Section

• At retirement, members have the option to take a tax-free lump sum by exchanging part of their pension for cash, up to a maximum of 25 per cent of the total value of their pension.

2015 Scheme

• At retirement, members have the option to take a tax-free lump sum by exchanging part of their pension for cash, up to a maximum of 25 per cent of the total value of their pension.

1995 Section

• If members are too ill to do their current NHS job, they will receive the pension they have already built up without reduction for taking it early (tier 1).
• In addition, if members are too ill to work in any other regular employment, they will receive an enhancement of two-thirds of the service they would have achieved had they worked up to age 60 (tier 2).

2008 Section

• If members are too ill to do their current NHS job, they will receive the pension they have already built up without reduction for taking it early (tier 1).
• In addition, if members are too ill to work in any other regular employment, they will receive an enhancement of two-thirds of the service they would have achieved had they worked up to age 65 (tier 2).

2015 Scheme

• If members are too ill to do their current NHS job, they will receive the pension they have already built up without reduction for taking it early (tier 1).
• In addition, if members are too ill to work in any other regular employment, they will receive an enhancement of half of the service they would have achieved had they worked up to state pension age (tier 2).

1995 Section – active members

• Those nominated by the member are entitled to death in service benefits including:
  • a lump sum of two times the member’s annual pensionable pay
  • a portion of the member’s pension payable to a spouse/partner for the rest of their life
  • a pension payable to dependent children.
• From 1 April 2022, all active members will be contributing to the 2015 Scheme and no death in service benefits will be paid from the 1995 section. Instead, the 2015 Scheme death in service benefits will apply.

2008 Section – active members

• Those nominated by the member are entitled to death in service benefits including:
  • a lump sum of two times the member’s reckonable pay
  • a portion of the member’s pension payable to a spouse/partner for the rest of their life
  • a pension payable to dependent children.
• From 1 April 2022, all active members will be contributing to the 2015 Scheme and no death in service benefits will be paid from the 2008 section. Instead, the 2015 Scheme death in service benefits will apply.

2015 Scheme – active members

• Those nominated by the member are entitled to death in service benefits including:
  • a lump sum of two times the member’s relevant earnings (read the death in service guide for more details).
  • a portion of the member’s pension payable to a spouse/partner for the rest of their life
  • a pension payable to dependent children.