The NHS Pension Scheme is split into three main sections: the 1995 Section, the 2008 Section, and the 2015 Scheme. The older 1995 and 2008 sections are 'final salary' schemes with fixed retirement ages, while the 2015 Scheme is a 'career average' (CARE) scheme linked to your State Pension age. All actively serving NHS staff now contribute to the 2015 Scheme, but your final pension is likely made up of benefits from multiple sections if you have long service.
Understanding the Three NHS Pension Schemes
If you've worked in the NHS for a while, you may have heard colleagues talking about being in the '95 scheme' or the '2015 scheme'. These terms refer to different versions of the NHS Pension Scheme that have existed over the years. Understanding which sections you have benefits in is key to planning for your future.
Here’s a quick history:
- The 1995 Section: This was the main scheme for everyone who joined the NHS before 1 April 2008.
- The 2008 Section: This was introduced for new joiners from 1 April 2008. Existing members in the 1995 Section were also given a one-off choice to move their past and future service to the 2008 Section.
- The 2015 Scheme: This was introduced on 1 April 2015 as part of wider public sector pension reforms. Initially, only new staff and younger members of the older schemes were moved into it.
Crucially, as of 1 April 2022, every active member of the NHS Pension Scheme now builds up their pension in the 2015 Scheme. If you were previously in the 1995 or 2008 Section, the pension you earned there is protected and will be paid to you at retirement. It's just that all your future pension is now being built up under the 2015 Scheme's rules.
How Your Pension Is Calculated: Final Salary vs CARE
The biggest difference between the older sections and the 2015 Scheme is the way your final pension is calculated. The 1995 and 2008 Sections are 'final salary' schemes, while the 2015 Scheme is a 'Career Average Revalued Earnings' (CARE) scheme.
The 1995 and 2008 'Final Salary' Schemes
In these schemes, your pension is based on two main things: your length of service and your pensionable pay just before you retire. For most people, this is the average of the best of their last three years of earnings.
Each scheme has a different 'accrual rate' – the fraction of your salary you get as pension for each year of service.
- 1995 Section: The accrual rate is 1/80th. For each year you were a member, you get 1/80th of your final pensionable pay as an annual pension. This section also gives you an automatic, tax-free lump sum of three times your annual pension.
- 2008 Section: The accrual rate is better at 1/60th. However, there is no automatic lump sum. You can choose to give up part of your annual pension in exchange for a tax-free lump sum if you wish.
The idea is that your pension is linked to your earnings at the peak of your career, rewarding long-term progression.
The 2015 'CARE' Scheme
The 2015 Scheme works differently. Instead of waiting until you retire, it calculates a portion of your pension each year and adds it to your personal pension pot.
The accrual rate is 1/54th. Each year, you earn a pension equal to 1/54th of your actual pensionable earnings in that year. This amount is then added to your pot.
To stop this pot from losing value over time, it is 'revalued' every year while you are still an active member. The revaluation rate is tied to the Consumer Prices Index (CPI) plus 1.5%. This helps your pension pot grow faster than inflation, protecting its value until you retire. Like the 2008 section, there is no automatic lump sum, but you have the option to exchange part of your pension for one.
Key Features Compared: A Side-by-Side Look
Seeing the main features next to each other can make the differences clearer. Remember that if you have service in more than one section, you'll have a pension made up of different parts, each calculated according to its own rules.
| Feature | 1995 Section | 2008 Section | 2015 Scheme |
|---|---|---|---|
| Scheme Type | Final Salary | Final Salary | Career Average (CARE) |
| Accrual Rate | 1/80th per year | 1/60th per year | 1/54th of each year's pay |
| Pension Based On | Pay near retirement | Pay near retirement | Average pay over your career |
| Normal Pension Age (NPA) | 60 | 65 | Your State Pension age |
| Automatic Lump Sum | Yes (3x annual pension) | No (option to convert) | No (option to convert) |
| In-service Revaluation | Not applicable | Not applicable | CPI + 1.5% per year |
What Do You Pay? Member Contributions
One thing that is the same for everyone is the amount you contribute from your salary. Your contribution rate is based on your pensionable earnings, not which scheme section your benefits are in. These rates are updated periodically.
The contribution tiers from April 2025 are as follows:
- Up to £13,259: 5.2%
- £13,260 to £27,288: 6.5%
- £27,289 to £33,247: 8.3%
- £33,248 to £49,913: 9.8%
- £49,914 to £63,994: 10.7%
- £63,995 and over: 12.5%
While these contributions are significant, it's vital to remember the value of the employer's contribution. The NHS, as your employer, contributes a further 23.7% of your salary into the scheme on your behalf. This makes the NHS Pension one of the most generous retirement schemes available. You can see how your pension contribution affects your net pay using an NHS take-home pay calculator.
A Practical Example: How It Works for a Nurse
Let's consider a simplified example. Aisha is a Band 6 nurse who joined the NHS in 2010. She is a member of the pension scheme throughout her career.
- From 2010 to 31 March 2015: Aisha was building up pension in the 2008 Section. This part of her pension will be calculated based on her final salary at retirement and these five years of service (5 x 1/60th x final salary).
- From 1 April 2015 onwards: Aisha starts building up pension in the 2015 Scheme. In her first year in this scheme, let's say she earns £35,000. She adds £35,000 / 54 = £648.15 to her 2015 pension pot. The next year, this £648.15 is revalued (increased by CPI + 1.5%), and a new slice based on that year's earnings is added.
- At retirement: Her total annual pension will be the sum of the part she earned in the 2008 Section plus the total pot she has built up and had revalued in the 2015 Scheme. She can then choose to exchange some of this combined pension for a tax-free lump sum.
This shows how your final retirement income can be a blend of benefits from different schemes, calculated in different ways.
The McCloud Remedy: What You Need to Know
You may have heard about the 'McCloud remedy' or 'pension underpin'. This relates to the way members were moved to the 2015 Scheme. The courts found that younger members were treated less favourably, which was age discriminatory. The remedy is designed to fix this.
It affects members who were in service on or before 31 March 2012 and were still in service on or after 1 April 2015. The 'remedy period' is from 1 April 2015 to 31 March 2022.
If you are an eligible member, when you come to retire you will be given a choice. For your service during the remedy period, you can choose to receive benefits calculated based on your old 'legacy' scheme (1995 or 2008) rules, or the 2015 Scheme rules. This is known as the 'Deferred Choice Underpin' (DCU).
You will be shown figures for both options at retirement, allowing you to choose the one that is better for you. You do not need to do anything now; the choice is made when you take your pension. For service from 1 April 2022 onwards, all members build pension in the 2015 Scheme.
Key takeaways
- The NHS Pension has three main parts: the 1995 and 2008 final salary sections, and the 2015 CARE scheme.
- Since April 2022, all actively working members build up their pension in the 2015 Scheme, but benefits earned in older sections are protected.
- The 1995 Section has a Normal Pension Age of 60 and includes an automatic tax-free lump sum of three times your pension.
- The 2008 Section has a Normal Pension Age of 65 and a better accrual rate (1/60th) but no automatic lump sum.
- The 2015 Scheme has the best accrual rate (1/54th) but links your Normal Pension Age to your State Pension age.
- The McCloud remedy gives eligible long-serving members a choice at retirement for their benefits earned between 2015 and 2022.
- Your Total Reward Statement (TRS) or Annual Benefit Statement is the best place to see a personalised breakdown of your pension benefits.