Pension contributions and tax arrangements

access to finance

The NHS Pension Scheme is financed by payments from the employer and current members who pay contributions at different tiers depending on their pay.

Read more:

Employer contributions and administration levy

The employer contribution rate for 2016/17 to 2018/19 is 14.3 per cent of pensionable pay for both the 1995-2008 Scheme and the 2015 Scheme. 

However, the Department of Health announced in March 2017 that they will introduce a levy on employers to pay for the administration of the NHS Pension Scheme. This levy is 0.08 per cent of pensionable pay and will be collected at the same time and in the same way as normal employer contributions. In practical terms, this means employers will pay 14.38 per cent of pensionable pay.

The employer contribution rate is set through a process known as the scheme 'valuation'. A scheme valuation is carried out every four years and it measures the full cost of paying pension benefits (to current pensioners). The most recent scheme valuation was carried out in 2012, view the full resultsThe 2012 valuation concluded that in order to pay the current pension benefits from the scheme, an increase, of 0.4 per cent, in the employer contribution rate was required from 2015/16. The results of the 2016 scheme valuation will determine the employer contribution rate required from 2019/20.

Member contributions

Tier  Pensionable Pay (whole-time equivalent) Contribution Rate from
2015/16 to 2018/19
 1  Up to £15,431.99   5.0%
 2  £15,432.00 to £21,477.99  5.6%
  £21,478.00 to £26,823.99   7.1%
 4  £26,824.00 to £47,845.99  9.3%
 5  £47,846.00 to £70,630.99  12.5%
 £70,631.00 to £111,376.99   13.5%
 £111,377.00 and over   14.5%

Tax arrangements

NHS Pension Scheme members will receive tax relief on their pension contributions up to a certain amount. This is because contributions are taken from pay before tax is taken off, therefore contributions reduce the amount of pay subject to tax.

The tax relief available for pension savings is subject to certain limits known as the annual and lifetime allowances, these are restrictions put in place by HMRC. You can find out more about these allowances on our annual and lifetime allowances web page.

Why Register?

Great reasons to register with NHS Employers

  • A personalised website
    Manage your profile and select topics of interest to you
  • Access your dashboard
    Bookmark useful content to help you quickly find what you're looking for
  • Get involved
    Contribute to our Talking Points discussions, comment on and rate our webpages
  • Keep up to date
    Receive the latest newsletters and media summaries

Log In