How Your NHS Pension Works
1/54th & Revaluation Explained
The NHS Pension is one of the most generous in the UK. Here’s a simple breakdown of how your retirement pot grows every year you work.
The 1/54th Build Up
This is your "Accrual Rate". For every year you are a member of the scheme, you Bank 1/54th of your pensionable pay towards your annual pension.
Earn £27,000 → Add £500 to your annual pension.
Earn £54,000 → Add £1,000 to your annual pension.
Annual Revaluation
Inflation protection. Each year, the pension you've already built up is increased by CPI (Consumer Price Index) + 1.5%.
This ensures that a pension earned 20 years ago still holds its purchasing power when you retire, plus a little extra growth (1.5%).
Real-World Example: Band 5 Nurse
Let's follow "Sarah", a newly qualified Band 5 nurse earning £30,000 a year.
| Year | Salary | Pension Earned (1/54th) | Revaluation (Assume 2% CPI + 1.5%) | Total Annual Pension |
|---|---|---|---|---|
| Year 1 | £30,000 | £555.55 | - | £555.55 |
| Year 2 | £31,500 (Pay Rise) | £583.33 | £555.55 x 3.5% = +£19.44 | £1,158.32 |
| Year 3 | £33,000 | £611.11 | £1,158.32 x 3.5% = +£40.54 | £1,809.97 |
*This is a simplified example assuming a step pay rise and constant inflation. In reality, your salary and inflation rates will vary.
Historic Schemes (Legacy Benefits)
While most staff are now in the 2015 Scheme, many have "banked" benefits in the older sections. Here is how they compare:
1995 Section (Final Salary)
- Normal Pension Age: 60 (55 for Special Class)
- Accrual Rate: 1/80th for each year of service
- Lump Sum: Automatic 3x annual pension
- Calculation: Based on final year's pay (or best of last 3)
2008 Section (Final Salary)
- Normal Pension Age: 65
- Accrual Rate: 1/60th for each year of service
- Lump Sum: No automatic lump sum (optional exchange)
- Calculation: Average of best 3 consecutive years in last 10
2025/26 Contribution Tiers
Updated April 2025 (3.6% uplift). These rates apply to all schemes (1995, 2008, and 2015). Contributions are based on your actual annual pensionable pay.
| Pensionable Pay (Annual) | Contribution Rate |
|---|---|
| Up to £13,247 | 5.2% |
| £13,248 to £27,797 | 6.5% |
| £27,798 to £33,863 | 8.3% |
| £33,864 to £50,843 | 9.8% |
| £50,844 to £65,189 | 10.7% |
| £65,190 and above | 12.5% |
Frequently Asked Questions
Is the lump sum automatic?
No. In the 2015 Scheme, there is no automatic lump sum. However, you can choose to give up some of your annual pension to get a tax-free lump sum at a rate of £12 cash for every £1 of pension pension given up.
What happens if I leave the NHS?
If you have more than 2 years of membership, your pension is preserved. It will still be revalued every year (usually by CPI only, without the +1.5%) until you claim it at state pension age.
Check your take-home pay today
See how much you contribute to your pension each month with our updated 2024/25 & 2025/26 calculator.