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Can I Pay More into My NHS Pension Scheme?

The roles of medical professionals vary enormously but one thing remains a constant.

Whether part of a busy GP practice tending to the needs of a local community or working in a hectic Accident & Emergency Department, they’re all vital in caring for the health of the nation.

In return, for looking after us, medical professionals themselves are looked after with the NHS Pension Scheme, an attractive benefit for those who work in such a challenging environment. As a medic, there may be some aspects of your NHS pension that you’re not too sure about, such as how much you pay in; if that’s enough; or if you should be considering paying in more. Here’s all you need to know.

How much do I pay into my NHS Pension Scheme?

Both full-time and part-time medical professionals pay a percentage of their pensionable earnings into their pension each month, irrespective of which section of the NHS Pension Scheme they are a member of – the 1995 section, the 2008 section or the 2015 Pension Scheme. For a hospital doctor in England, Wales and Northern Ireland the contribution depends on the level of pensionable earnings (see below) and starts at 5% for anyone earning less than the full-time equivalent of £15,431.99 a year, rising in stages to 14.5% for those on more than £111,377 a year.

NHS contribution rate percentages

  • If you earn between £15,432 and £21,477.99 your contribution rate is 5.6%
  • If you earn between £21,478 – £26,823.99 your contribution rate is 7.10%
  • If you earn between £26,824 – £47,845.99 your contribution rate is 9.3%
  • If you earn between £47,846 – £70,630.99 your contribution rate is 12.5%
  • If you earn between £70,631 – £111,376.99 your contribution rate is 13.5%
  • If you earn above £111,377, your contribution rate is 14.5%

NHS contribution rates in Scotland

In Scotland, the rates are different:

  • If you earn up to £20,605 your contribution rate is 5.2%
  • If you earn between £20,606 – £24,972 your contribution rate is 5.8%
  • If you earn between £24,973 – £31,648 your contribution rate is 7.3%
  • If you earn between £31,649 – £64,094 your contribution rate is 9.5%
  • If you earn between £64,095 – £89,731 your contribution rate is 12.7%
  • If you earn between £89,732 – £119,560 your contribution rate is 13.7%
  • If you earn £119,561 or above your contribution rate is 14.7%

For a GP in England, Wales and Northern Ireland in the 2015 Scheme, the contribution rates are the same but are determined by the level of annualised earnings. In Scotland annualisation of earnings is not applied and the contribution is based on actual earnings. The member contribution is then topped up by employer contribution. In England and Wales the rate for this changed from 14.38% to 20.68% on 1 April 2019, which includes a scheme administration charge of 0.08%. In Scotland the rate is 20.9% and in Northern Ireland 22.5%

You receive pension tax relief on your contributions at your highest marginal rate of income tax.

Can I pay more into my NHS pension scheme?

Yes, you can pay more than the fixed contribution into your NHS Pension Scheme. However, whether you should or shouldn’t is a completely different matter.

Why should I consider paying more into my NHS Pension Scheme?

There are various reasons why you might want to invest more money into your NHS Pension Scheme. These include:

  • Short service.

    You may have joined the NHS and qualified as a medical professional later in life, meaning you have fewer years’ of membership of the pension scheme.

  • Overseas move.

    Another reason for joining the scheme late applies to those medics who have relocated from overseas to work for the health service.

  • Part-time.

    It may be that you have not always worked full-time as a medical professional within the NHS, so therefore have contributed less to your pension.

  • Career breaks.

    It is not uncommon for medical professionals working in this demanding profession to have career breaks, which equates to a reduction in pension contributions.

How do I pay more into my NHS Pension Scheme?

There are three ways in which it is possible to pay more money into your NHS Pension Scheme, should you wish to.

  • Added years.

    This option is no longer available for new applicants but there will currently be many medical professionals who are paying extra contributions to have years added to their pensions.

  • Additional pension purchase.

    Within the pension scheme, medical professionals can buy additional annual pension benefit in set £250 amounts.

The cost, which is determined by the scheme actuary, depends on your age and can be paid with a lump-sum or over a fixed-term of between one and 20 years.

This option is available across all three sections of the NHS pension scheme:

  • 1995 and 2008 section – maximum of £5,000 of guaranteed index linked pension available, with or without dependants’ pensions.
  • The 2015 Scheme – the same as above, but to a maximum of £6,500

Early Retirement Reduction Buy-Out (ERRBO) This option is only available within the 2015 Scheme, where the normal pension age is in line with State Pension Age.

Members can pay extra contributions to buy out the reduction that would apply if they claimed their benefits up to three years early, with a minimum age of 65.

Are there any other additional ways of topping up my NHS pension?

Money Purchase Additional Voluntary Contributions are another option for topping up your NHS Pension. These are Additional Voluntary Contribution (AVC) schemes provided for the NHS by Standard Life and Prudential. These do not guarantee a set income in retirement but instead offer flexibility. For example, a doctor could retire early or reduce the number of hours he or she works by using an AVC to fund this until his or her NHS Pension starts to pay out.

We can provide AVC pension advice.

Personal Pensions

Like Money Purchase AVC’s personal pensions are flexible and equally rely on investment performance. They can be accessed from age 55 and can be a useful complement to your NHS pension.

With any additional pension planning it is essential to consider the potential impact on both the annual and lifetime allowance.

Whatever your motivation to increase your pension funding, given the array of options available, whether through your employer or a private arrangement, it is imperative that your pension saving strategy is well informed.

As an independent pension adviser and specialist in the NHS Pension Scheme, Chase de Vere Medical has been helping doctors to plan effective pension strategies to reach their objectives for 13 years. To ensure you take the right steps toward your retirement, speak to an independent adviser.

The contents of this article are for information purposes only and do not constitute individual advice.

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