The RCM is unable to give individual financial advice about pensions, this webpage includes a brief overview of NHS pensions along with links to relevant NHS pension agency briefings. The RCM is a member of the pension Scheme Advisory Board (SAB) which covers England and Wales and enables us to influence the scheme as a whole on behalf of our members.
SAB membership also includes other NHS trade unions, employer representatives, the Department of Health and advisors including actuaries, lawyers and auditors. The RCM is also a member of the SABs in Scotland and in Northern Ireland. The SABs aim to work in partnership to provide advice to the responsible authority on the desirability of changes to the scheme and also respond to policy issues or to proposed changes to the regulations governing the scheme.
RCM Pensionable Pay Guidance
The RCM has produced guidance on pensionable pay which can be found here.
RCM pension webinars
The RCM has held a series of virtual pension events and you can access the recordings below:
Changes to the NHS pension scheme
This webinar focuses on the changes to the NHS pension schemes across the UK. From 1 April 2022 those in the NHS pension scheme will all be moved into the 2015 scheme.
Saving enough to stop work
Setting targets for retirement, looking at how much you’ve built up and what you’re building up, and potentially taking action to address any shortfalls.
Zoë Sadler is a qualified actuary with 26 years’ experience in the pensions industry. She is part of First Actuarial’s Financial Wellbeing team and worked at several other actuarial consultancies before joining First Actuarial in 2019. Zoë is very enthusiastic about helping people to understand their pensions and wider benefits.
The NHS Pension Scheme is a public service pension scheme, it is open to NHS workers aged between 16 and 75. It is a Defined Benefit scheme, this means there is a promise to pay pension benefits based on salary and length of service. Member contributions are tiered and currently (Nov 2021) 5% to 14.5% dependant on salary, employer contributions are currently 20.6% (2019). Contributions to the scheme are used to pay benefits. You can view member contribution rates here.
There are 1.6 million NHS workers in England and Wales, 80% of those workers are women and 40% work part time. The age demographics of those working in the NHS has changed over time, in 1955 16.1% of men working in the NHS were aged 60 or above and 19.8% of women were. In 2006 this had changed to 30.1% and 31.8% respectively.
Purpose of the scheme
The purpose of the NHS pension scheme is to provide valuable, competitive and secure guaranteed retirement benefit for all those working in the NHS. It also aims to support the recruitment and retention of staff and support longer working.
Because of pension reforms over the years there are different pension schemes in the NHS. Membership of the schemes will depend on age and date of joining. Certain occupations such as midwives, nurses and physiotherapists who joined the NHS before 6 March 1995 may have what is known as Special Class Status which means that they can retire at 55 with unreduced benefits (provided the last 5 years of membership is in one of the special classes).
In 2008 there were reforms to the scheme and existing members could choose (known as the Choice exercise) to move to the new scheme whilst keeping the same pension age (60 for most but 55 for special classes).
- Accrual rate = The proportion of your earnings you get as a pension for each year in the scheme.
- Pension is calculated by: Pensionable earnings divided by accrual rate times by number of years service.
- Both 1995 and 2008 schemes total membership cannot exceed 45 years. Minimum age of joining is 16.
The 1995 scheme
- Provides an annual pension worth 1/80th of the best of the last three years (final salary)
- A tax free lump sum 3x pension.
- A normal pension age of 60. Minimum pension age 55.
The 2008 scheme
- Provides an annual pension worth 1/60th of reckonable pay per year (final salary)
- The option to exchange part of pension for cash at retirement to a limit
- A normal Pension age of 65. Minimum pension age 55.
You can see detailed information about the 1995 and 2008 schemes here.
The Hutton Report 2011
This reviewed the financial sustainability of public sector pension schemes, changes in life expectancy and fairness between lower and higher earners.
The report contained a series of recommendations for public sector pension schemes:
- Pensions should be based on Career Average Revalued Earnings (rather than final salary as previous schemes)
- Normal Pension Age should be in line with State Pension Age,
- There should be :
- A clear cost ceiling and stabilisers
- Independent oversight and governance
- A legal framework
- Commonality across the public services.
The Public Service Pension Act 2013 put in place the legal framework, NHS Pension scheme regulations, a governance framework, a Pension Board, the Pension Scheme Advisory Board and a technical advisory group. The reformed scheme was introduced on 1 April 2015.
The 2015 Scheme
- Provides an annual pension worth 1/54 of each years pensionable earnings (Career average Revalued)
- The option to exchange part of the pension for a lump sum
- Pension age that is equal to the state pension age. You can find out your current state pension age here.
The 2015 reforms were introduced on the 1 April 2015 for all new starters and some existing pension scheme members. It was decided to provide protection to those within 10 years of their normal retirement age on 1 April 2012. For those who were between 10 and 14 years of their normal retirement aged tapered protection was given with this ending in February 2022
In December 2018 Court of Appeal ruled that the protection to those closer to retirement when the 2015 scheme was introduced gave rise to unlawful discrimination. The 2015 scheme in itself was not found to be discriminatory. In order to remove the discrimination, the Government must ensure equal treatment from 1 April 2015 to 1 April 2022 (know as the remedy period). Affected scheme members will be able to choose to stay in their legacy schemes or move into the reformed scheme for the remedy period at retirement. The legal process that underpins this will be complete in October 2023
Where we are now?
Eligible pension scheme members do not have to take any action. The NHS pension agency will write to all individuals affected by the McCloud judgement. Those who have retired already or are to retire before 2023 will be given a retrospective choice after the legislation is passed. Individual scheme members will receive a letter about their circumstances with the options available to them.
From 1 April 2022-ALL members of the NHS Pension scheme will move into this scheme. Benefits accrued in existing 1995 and 2008 schemes will be frozen and preserved
NHS Business Services Authority have published information about the changes, including an animation which can be found here
Please look at your individual pension so you understand you own situation and how this may affect you. You can access your Total Reward statement via your Trust ESR system.