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Opting out of the NHS pension scheme

Over 150,000 NHS staff opted out of the NHS Pension between April and December 2022.  

Here’s 10 things to think about before you opt out of the NHS Pension:

  1. Opting out of the NHS Pension is a pay cut to your future self
    Your NHS Pension is a valuable part of your overall pay and reward package. It’s a form of delayed payYou get paid for work you do now, but the NHS Pension will also pay you money when you retire linked to how long you are paying into the scheme. Unlike private pensions, the NHS Pension is a guaranteed, inflation proof income for life. Opting out of the NHS pension can mean you lose out on valuable benefits now and in retirement which we explain in detail below.



  2. Don’t miss out on employer contributions
    By opting out of the NHS Pension Scheme, you could miss out on substantial contributions to your pension from your employer. If you are an employee of a trust, GP practice or another approved NHS pension employer or alternatively a locum then the employer contribution is paid by the employer or practice you locum at. It’s worth mentioning that GP partners though pay this contribution themselves.

  3. Sacrificing a guaranteed lifetime income
    One of the significant advantages of the NHS Pension is it’s a government-backed income for life in retirement which is uplifted each year by inflation. By opting out, you reduce this guaranteed income.  Download our guide to the checks you need to make on your NHS Pension today.



  4. Inflation proof retirement income growth
    The NHS Pension Scheme adjusts your pension pot to account for inflation plus a further 1.5% in some parts of the scheme (e.g., the 2015 scheme), ensuring that your purchasing power is maintained. However, by opting out, you would lose some of this benefit. 

  5. No investment risk with the NHS Pension
    Unlike private pensions, the NHS Pension doesn’t rely on the performance of the stock market and unlike private pensions there is no pot of money to run outInstead, the NHS Pension pays you a state backed income for life.

  6. Impact on dependent benefits
    Opting out of the NHS Pension not only affects your own retirement income but also has implications for your dependents. By staying within the scheme, your legal spouse, registered civil partner, qualifying scheme partner, and dependent children may receive an enhanced income after your passing, offering them additional financial security. Read more on this topic here.



  7. Potential loss of lump sum death benefits
    In addition to dependent income, your loved ones may be entitled to a tax-free lump sum payment from your NHS Pension upon your death. Opting out would result in reduced benefits for your dependents.



  8. Dealing with ill health
    The NHS Pension Scheme provides a guaranteed inflation-proofed income for life in the event of permanent ill health, with enhanced benefits for more serious illnesses. Opting out would mean reducing this valuable protection.

  9. Can’t afford the contribution
    With a cost-of-living crisis and real terms pay cuts for doctors, nurses and other healthcare professionals, and as doctors ourselves, we get it. You are though losing out on significant benefits and family protection.  Could you use our free tax rebate to claim a tax rebate and free up some ££? Free guide for doctors here. Free guide for nurses and other HCPs here.



  10. Considering tax implications
    It’s important to consider the tax implications when opting out of the NHS pension. Pension contributions are tax deductible expenses so paying into the pension scheme can reduce your tax by anything from 20% to 60% multiplied by the contributions you pay depending on earnings levels.  While higher taxes may arise for high earners due to the annual allowance, recent (March 2023) government changes to pension tax rules have changed everything.  Watch here to learn how you can benefit from the latest tax changes.

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So where to start?

Whatever you do, do not neglect your Pension. 

At a minimum you need to perform the checks outlined in this guide.

If you’re worried about pension tax bills and not aware of the significant changes that happened in March 2023 then watch this. 

If you need advice on your NHS Pension you need an advisor that actually understands the NHS Pension (most advisors don’t) Learn how to find the right NHS Pension advice here.

150,000 opt out reference


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