NHS Pensions for IMG Doctors

When you work in the UK as an NHS doctor, you will likely wonder what happens at the pension age. After all, you want to ensure that when you can no longer work, you have the money to live comfortably! To do so, you will need a good pension, which requires saving money throughout your working years. Fortunately, the NHS makes saving for retirement easy with its own NHS pension scheme.

When you work for the NHS, you can become part of a specific NHS pension scheme for healthcare professionals. That involves paying a contribution rate from your income, which the NHS tops up. As an IMG you might not see yourself retiring in the UK and therefore wish to opt out of your pension contributions. Don’t worry, this is ok too.

There used to be two NHS pension schemes running alongside each other, the older 1995/2008 scheme and the 2015 scheme. The older sections closed to further build-up on 31 March 2022, so every active member now builds up benefits in the 2015 scheme regardless of age. Anything already earned in the older sections stays there and is paid alongside your 2015 benefits. This article focuses on the 2015 scheme, which is the one you will join!

What is the 2015 NHS Pension Scheme?

The 2015 NHS pension scheme is called a Career Average Revalued Earnings Scheme – commonly referred to as the CARE scheme. It started in April 2015, and since 1 April 2022 it has been the only NHS scheme anyone builds up new benefits in.

With this scheme, you get a guaranteed level of benefits once you retire. The pension you receive will be the amount of pensionable pay during the year. It is based on a specific formula.

When under this scheme, you will pay contributions based on your earnings. Naturally, the more you earn, the more contributions you will make. Here are the four ways you will build up your pension over the years:

Build-Up Rate

Under the 2015 NHS pension scheme, your build-up rate is a fraction of your pensionable pay, 1/54th of your pensionable earnings. So, if you earn £30K of pensionable earnings, 1/54 of that would be just over £555, which would go into your pension. So the more money you make, the more you’ll save for retirement.

Annual Revaluation

Each year, there will be an increase in the amount of pension you get. How much depends on the rate determined by Treasury Orders as well as an additional 1.5%. Then, those two rates get added up. For example, if the Treasury Order determines the rate to be 1.5%, then the total of your pension that would be revalued would be 3% (1.5+1.5). This rate will be revalued for the following scheme year.

Length of Scheme

Of course, how much pension you build up depends on how long you stay in the pension scheme. You can stay in the NHS pension scheme until the age of 75. However, you can access the pension before that time.

Pensionable Earnings

How much you earn significantly influences how much pension you will build over time. So, if you ever take on a lower-paid job in the NHS, you can expect to build up less pension during those years. On the other hand, if your pay increases, so will the amount of pension you save.

It’s only pensionable earnings that count towards your pension, though. Pensionable earnings include your salary, wages, and fees you get from working for the NHS, but it does not cover overtime or bonuses.

Who is Eligible for the Scheme?

Anyone who works for the NHS and is between the ages of 16 and 75 can be a member of the scheme. That includes a wide range of people in NHS employment, including dentists, nurses, general practitioners, general medical practice staff, freelance locum doctors, and more. You are eligible for the NHS pension scheme as an IMG working as an NHS doctor.

Can You opt Out of NHS Pensions?

Yes, you can opt-out at any point in your career. To do this, you will fill out the NHS Pension Scheme Form. You can always rejoin later if you still meet the criteria.

What Happens if You Leave the NHS?

You might wonder what happens if you leave the NHS or the UK. Of course, when you leave the NHS, you won’t benefit from the NHS pension scheme anymore. There are two options here:

Refund

A refund is only possible if you have less than two years’ qualifying membership of the scheme, have stopped contributing in all NHS employments and are under normal pension age. If you have two years or more you cannot take a refund at all, which matters if you are planning to go home and were counting on getting your money back. You claim a refund on form RF12. Be aware that it is not a full return of what you paid in: tax is deducted at 20% on the first £20,000 and 50% on anything above that, and your employer’s contributions are never refunded.

Transfer

If you have two years or more in the scheme, your options are to leave your benefits preserved or to transfer them. Preserved benefits are revalued each year in line with the cost of living and are paid at normal pension age, and you can claim them from abroad into an overseas bank account, so leaving the UK does not mean losing them. If you would rather transfer, you can move them to another UK defined benefit scheme, or overseas to a QROPS. Note that transfers to defined contribution schemes have not been allowed since 2015, and that overseas transfers have attracted a 25% charge since 30 October 2024 unless you live in the same country as the receiving scheme.

Pension Allowances and Tax

You may have heard of the pension ‘lifetime allowance’. It was abolished on 6 April 2024, so there is no longer any cap on the total value of pension you can build up before extra tax applies. If you read older articles telling you to stop contributing once you hit £1,073,100, ignore them.

Two allowances did replace it, and they only limit tax-free lump sums rather than the pension itself. The lump sum allowance caps the tax-free cash you can take in your lifetime at £268,275, and the lump sum and death benefit allowance sits at £1,073,100. The one that actually catches senior doctors is the annual allowance, which limits how much your pension can grow in a single tax year. It is £60,000 for most people and tapers down to as little as £10,000 once adjusted income passes £260,000. If you are approaching consultant level it is worth getting advice on this, but it is not a reason to opt out of the scheme.

When Can You Collect Your Pension?

After building up so much money over the years, you might wonder when you can retire and collect your pension. That depends on the scheme you’re under. If you’re part of the 1995 scheme, you can collect your pension at age 60. If you’re under the 2008 scheme, you can collect it at 65. You can also collect it at either age 65 (or state pension age) when a member of the 2015 NHS pension scheme.

In Summary

When working for the NHS, we recommend joining the NHS pension scheme, as it sets you up for retirement. With a mix of your contributions and contributions made by the NHS, you can enjoy comfortable living when you retire.

If you’re about to start your journey towards working in the NHS and would like to know more about life in the UK as well as keep up to date with all the latest medical job vacancies the get in touch.