How to Claim Your NHS Pension
The NHS Pension Scheme famously offers some of the best benefits for career pensions in the UK. However, the scheme has also undergone some changes in the last 20 years or so. These changes might affect your NHS Pension entitlements. If you are unsure about your NHS Pension status, read this guide. It will explain to you how to claim your NHS Pension.
Am I eligible for an NHS Pension?
You are eligible to participate in the NHS Pension Scheme if you are an NHS worker between 16 and 75 years old. The 1995 section and its regulations closed in April 2008 to be replaced by the 2008 section for new members. You should know if you joined the scheme because you will be paying contributions. The contribution rate varies according to your earnings, from 5% to 8.5% of your pensionable pay. You might decide to make Additional Voluntary Contributions or buy Additional Pension from £250 to £5,000 on top. Leaving and rejoining the scheme at any time can affect your benefit entitlements, depending on the dates and circumstances. You can use the NHS Pensions Member Hub to monitor your NHS Pension. You should contact them if you do not know your NHS Pension Number in order to access your account information.
How do I apply for my NHS Pension?
You must actively claim your NHS Pension by applying for it upon your retirement. You must agree on a retirement date with your employer and fill out an AW8 claim form. There will be notes to assist you with filling out the required sections, which are parts 7 – 15. You may also have to provide requested certificates (certified copies or originals only). Your employer should then complete the rest of the form and submit it to NHS Pensions for you. NHS Pensions will contact you if they need further information to process your claim. They should set a target date to begin paying your pension within 30 days of your retirement date at most.
When can I claim my NHS Pension?
The “normal retirement age” is the age that you can take your pension without any reductions. You will have the option to take early retirement at the minimum retirement age if your pension will be greater than the minimum guaranteed pension at that point. The minimum age is 50 or 55 depending on which section of the scheme you joined and when. These factors also determine your normal retirement age, which will be either 60, 65, or your State Pension age. There are also more flexible options for transitioning from work into retirement by the age of 75. If you prefer, you could continue working and earning benefits until you reach 75 years old or 45 years of participating in the scheme. Claim your pension whenever you are ready. You should apply for your NHS Pension at least 4 months before you intend to retire so that there is time to process your claim. It is important to return your AW8 form at least 3 months before your retirement date.
Can I take my NHS Pension and carry on working?
Some NHS staff decide to “retire and return” which means they took their pension but want to resume their employment with the NHS. If you want to do this, then you must apply to your employer. They will consider your application on its individual basis and decide whether you can return to work for them. Usually, this will depend on balancing workforce requirements, including budgets and knowledge retention. There will never be an automatic approval in these cases and being able to “retire and return” is not guaranteed. The more flexible options for taking your NHS Pension but continuing to work involve reducing your hours, stepping down into a lower role, or reducing your pay until you eventually retire completely. Your choices and how they affect your benefits depend on when you joined the NHS Pension Scheme and under which section.
How much NHS Pension will I get?
You should receive an Annual Benefit Statement which shows the progress of your pension. Log into the Total Reward Statement portal to view these details. There is a free service to request an estimate of your NHS Pension. It is based off information from your employer up to 31st March each year. There is also an early retirement calculator to estimate what you would get if you chose to leave at the minimum retirement age. However, it doesn’t calculate benefits for 50-55 year olds under the 1995 section of the scheme. Your pension amount will depend on which section of the scheme you joined and have been contributing under.
1995 Final Salary Scheme
Under the 1995 scheme, your NHS Pension will be 1/80th of the highest pensionable pay from your last 3 years at work. This means that your pension calculation is: pensionable pay x days of pensionable membership x (1/80 x 1/365). This will calculate your annual pension amount. For example, if your highest pensionable pay was £33,000 and you were in the 1995 scheme for 15 years (which is 5,475 days), then the calculation would result in an annual pension of £6,187.50. You could use this to work out monthly or weekly amounts.
2008 Final Salary Scheme
Under the 2008 scheme, your NHS Pension will be 1/60th of your “reckonable” pay. “Reckonable” pay is the average of your best pensionable pay for 3 consecutive years during the last 10 years of your NHS career. Your pension is calculated in a similar way to the previous calculation. Reckonable pay x days of pensionable membership x (1/60 x 1/365) calculates your yearly pension entitlement. For example, if you were in the 2008 scheme for 8 years (2,920 days) and your reckonable pay was £75,000, your pension would be £10k a year.
2015 Career Average Scheme
The 2015 section of the NHS Pension Scheme is a “revalued earnings” scheme. It bases your final pension on your pensionable pay throughout your NHS career. The amount that you earn for your pension every year is the build-up rate of 1/54th of pensionable earnings. This amount also increases each year before you retire or leave the NHS by a revaluation rate. The Treasury determines the revaluation rate using Treasury Orders plus 1.5%. So if you earn £18,000 in your first year, your pension would start at £333 before its revaluation.
Can I claim my NHS Pension as a lump sum?
A popular perk of the NHS Pension Scheme is the ability to withdraw a portion of your pension as a cash lump sum. Some people prefer to do this in order to clear debts or treat themselves (such as a holiday or home renovation). You can take a tax-free lump sum of up to 25% of your pension benefit value. Under the 1995 section, members automatically receive a lump sum of 3x their annual pension on retirement. There is not an automatic entitlement to a lump sum under the 2008 section. You can choose to exchange a part of your pension to receive a lump sum of £12 for every £1. This also applies to the 2015 section of the scheme.
How and when will my NHS Pension be paid?
Upon receipt of your application form, NHS Pensions will calculate your benefits. They should tell you how much you will receive and when you can expect payments. You should get your pension payments in arrears on the same date each month. The monthly payment will be 1/12th of your annual pension rate rounded to the nearest penny. As it is the safest payment method, your pension will go directly into your bank account or building society account. You will have to make alternative arrangements if you plan to retire to another country. You may have to pay Income Tax on your pension because these benefits count towards earnings.
What happens to my NHS Pension after illness or death?
If you become too ill to work, you can retire and claim your pension benefits as long as you have at least 2 years of membership. The minimum pension age does not apply for ill-health retirement. You can take your pension immediately if you are terminally ill. Obtain a form from your employer to submit an application for early retirement because of ill health. If you pass away, the NHS Pension Scheme offers a lump sum to your spouse or nominated person. If you have any dependants, they may be able to receive a percentage of your pension. The amount depends on the status of your pension benefits and the circumstances of your death. There is a separate Injury Benefit Scheme if you contract a disease or an injury in the course of NHS work.