Pension Awareness Week is all about helping to raise awareness of the importance of pensions. Throughout the week we’ll be sharing information on the NHS Pension Scheme, what it is and why it’s so important.
Alongside your salary, your NHS pension is one of the most valuable employment benefits you have. It’s important to understand these benefits and what they can provide when you retire.
It’s never too early to start planning for retirement – in fact the earlier, the better. You should start your planning now so you can fully understand how you can make the most of your pension benefits.
Think about how you want to spend your retirement
Look at the Retirement Living Standards. They’ve been developed using research from Loughborough University to help give a picture of what income you may need in retirement based on your lifestyle and activities. The standards show you what life in retirement looks like at three different income levels, and what a range of common goods and services would cost for each level.
Understand how much your pensions will provide
Once you have an idea of your annual retirement expenses, the next step is to look at your pension benefits.
Our Member Guides give information on how your pension grows and is calculated:
1995/2008 Member Guide (PDF: 5.02MB)
2015 Member Guide (PDF: 3.27MB)
Your Annual Benefit Statement or Total Reward Statement shows you what your pension would be if paid today.
You can find more about all the benefits on your annual Total Reward Statement or Annual Benefit Statement which is available via ESR or online at nhsbsa.nhs.uk/employee-section
Don’t forget to also look at what you may have in state pension or other pensions.
The new full state pension is £203.85 per week, for 2023/24. You can check what your state pension is estimated to be online at: The new State Pension: What you'll get - GOV.UK (www.gov.uk)
Weigh up the impact of opting out in the long term
Opting out of pension contributions can seem like an easy way to increase your household budget now. However, opting out can have a long-term impact on your pension savings.
One of the best things about pension saving is the extra money you get from the Government, called tax relief. Because you’re a member of the NHS Pension Scheme, you pay reduced income tax - so your actual contribution will cost less than the percentage shown in the table. If you opt out of the pension scheme, you’ll lose this tax relief, and you’ll need to make alternative plans for when you retire. You’ll also lose enhanced ill health retirement, life assurance and family benefits cover.
If you’d like to find out more about the benefits of the NHS Pension Scheme, visit our Member Hub: Understanding your benefits in the 2015 Scheme | NHSBSA
Knowing when you can retire
It’s important to know when you can retire and start to claim your pension benefits. The normal pension age is the age you can retire and have your NHS pension paid without reduction for early payment.
The normal pension age is:
-
age 60 in the 1995 Section,
-
age 65 in the 2008 Section
-
your State Pension Age in the 2015 NHS Pension Scheme (or age 65 if this is later)
There is a minimum pension age. The minimum pension age for most members is 55 but there are some members of the 1995 Section with a protected minimum pension age of 50. These are generally members who joined the NHS Pension Scheme before 6 April 2006.
Partial retirement
Retirement is a big change in your life. You might decide that you don’t want to stop working completely. There are flexibilities in the NHS Pension Scheme to help you transition gradually from work to retirement.
If you are aged 55 and over and you have agreement from your employer, you can choose to take part, or all your pension benefits while you continue working in NHS employment and build your pension benefits in the 2015 Scheme. This is called partial retirement – it may also be known as drawdown.
This is already possible for pension benefits you’ve earned in the 2008 Section or 2015 Scheme. From 1 October 2023, the Department of Health, and Social Care (DHSC) is introducing changes to partial retirement so it will also include any 1995 Section benefits you have.
The amount of benefits you can take through partial retirement is also increasing. From 1 October 2023 you’ll be able to take from 20% up to 100% of all your pension benefits in one or two drawdown payments, without having to leave your current job.
If you’d like to find out more about partial retirement, visit our Member Hub: Partial retirement | NHSBSA
Look out for our next news article – When it’s time to claim your pension benefits.