The National Health Service / NHS

The National Health Service (NHS) operates a defined benefit scheme (see Occupational defined benefit schemes), with an annual pension based on the value of your final salary and a tax-free lump sum on retirement. There are different rules to calculate the benefits you are entitled to if you retire early on the grounds of ill health, and there are often differences between the way that annual pension is calculated for certain specific professional groups, such as General Practitioners, Midwives or Mental Health Officers. If you die, your surviving partner or family will also be entitled to benefits. Specialised pension schemes are generally more generous than other occupational pension schemes (see Occupational Pensions) when it comes to providing for their members and their members' families if they are in difficult circumstances.

The basic NHS pension scheme calculates a member's pension as:

annual pension =     number of years   x   accrual rate   x   final salary
from scheme            in scheme 1/80 
                             (to maximum of 45)

Your final salary may be calculated as your highest annual wage during the final three years of your NHS service, if your final salary reduced for any reason. For example, you retire after forty years of membership. Your salary over the last three years was £40,000, £45,000 and £43,000. Your annual pension will be:

                40 x 1/80 x £45,000 = £22,500 annual pension

You can buy additional years of service by making higher contributions to the pension scheme, and you are free to contribute to further personal pensions if you wish. An NHS pension will be increased in line with inflation to ensure that your retirement income retains its value. The National Health Service operates a helpline on 01253 774 774 if you have any enquiries