How Do State Pension Changes Affect Your NHS Pension?  

Within the last 18 months there have been two important changes to the State Pension.  With effect from April 2016 a new flat rate State Pension was introduced for new pensioners.  Then in July 2017 it was announced the State Pension Age will increase earlier than previously planned.  Both of these changes directly affect NHS doctors.

How the introduction of the flat rate State Pension made doctors’ take home salary go down

The change to the flat rate State Pension has had the effect of reducing doctors’ take home pay, unlikely as this may sound. 

Prior to the introduction of the new flat rate State Pension there were two elements to the State Pension: the basic State Pension and an Additional State Pension.  The Additional State Pension was based on the individual’s earnings and National Insurance contribution record.

Some occupational pension schemes, including the NHS Pension, were contracted out of the Additional State Pension.  This means the Scheme guaranteed to pay the additional benefits instead of the State and members paid a lower rate of National Insurance contributions to reflect this.

With the switch to the flat rate State Pension the practice of contracting out has ended.  This means NHS Pension members now pay the full rate of National Insurance contributions, which is what has an effect on doctors’ take home pay.

National Insurance Contributions are automatically deducted from salary in the same manner as Income Tax.  The National Insurance contribution rates before and after the end of contracting out are compared in the table below:



2015/16 National Insurance Contribution rates were:


  -1.4% (i.e. a 1.4% rebate) on earnings from £486-£672 a month

10.6% on earnings from £672-£3,337 a month

12% on earnings from £3,337-£3,532 a month

2% on earnings over £3,532 a month


Current (2017/18) National Insurance Contribution rates are: 

0% on earnings from £490-£680 a month


12% on earnings from £680.01-£3,750 a month


2% on earnings over £3,750 a month


How doctors’ retirement age is affected by changes to the State Pension Age

In a parliamentary statement on 19 July 2017 David Gauke, the Secretary of State for Work and Pensions, announced that the increase in the State Pension Age to age 68 is to be brought forward by seven years to between 6 April 2037 and 5 April 2039, rather than 2044-2046 as originally provided for in the Pensions Act 2007. 

Doctors born on or after 6 April 1970 will be affected by the earlier State Pension Age increase and this news is of particular relevance for doctors in this group who are building up NHS Pension benefits in the 2015 Scheme.  In the 2015 Scheme the Normal Pension Age is the same as State Pension Age.  As the Scheme literature states, this will rise if the State Pension Age rises. 

Doctors who do not wish to work until age 68 can retire early and take pension benefits before Normal Pension Age.  The minimum retirement age is currently 55 but is increasing to 57 by 2028 and will then track ten years below State Pension Age, so is now due to increase further to 58 by 2039.  However, if early retirement is taken pension benefits will be reduced.

It is possible to take out an ‘Early Retirement Reduction Buy Out’ contract (ERRBO) to buy out the reduction that would otherwise apply when claiming benefits up to three years before Normal Pension Age (but not earlier than age 65).  If taken, you or your employer would pay extra pension contributions.  The amount of additional contributions would depend on your age and the number of years’ reduction to be bought out.  NHS Pensions have a factsheet for more information on this option.

Normal Pension Age under the 1995/2008 Scheme is unaffected by changes to the State Pension Age.

Find out more

You can check your State Pension Age at and get a State Pension forecast at

If you would like personalised advice on your pension and retirement planning please contact Richard Higgs CFP FPFS on 0117 955 6599 or

More News
Can doctors trust the rising market? Monday, July 23, 2018
Quote Mark
  • "We have been very impressed with the personal service, attention to detail and comprehensive evaluation of our financial circumstances. We would certainly appreciate ongoing help and support from Richard over the future." Jason Kendall (Consultant in Accident and Emergency), Southmead Hospital
  • "Richard provides a very convenient and personal service. Richard has good knowledge and has the ability to go through reasoning for any recommendations." Tim Mitchell (GP), Montpelier Health Centre
  • "Richard provides an excellent service, prompt and flexible. Although the level of technical knowledge is impressive, answers to our questions are presented in a straightforward manner, without overwhelming us with information." Mary Gainsborough (Consultant in Paediatrics), Southmead Hospital
  • "Richard gives me an excellent personal service in my own home. His advice and explanations have been excellent. Richard also has excellent technical knowledge – who wouldn’t be happy?" Charles Record (GP), Frome Valley Medical Centre
  • "Richard provides an excellent, personal service. He responds very quickly and attentively to queries and very much keeps me up to date with important matters that affect me - such as the latest changes to pensions, investments and taxation. Recommendations are delivered in a timely, effective manner - usually face to face in my own home." Professor Gianni Angelini (Head of Cardiothoracic Surgery), BRI
  • "It is very convenient for me to be seen at home and Richard is very flexible with timings - especially when unexpected things crop up at the hospital. Meetings are friendly and relaxed with my long-term best interests very much at the heart of discussions." Professor Gianni Angelini (Head of Cardiothoracic Surgery), BRI
  • "We have found it far more reassuring having a local adviser rather than a national firm. We have found the service excellent and Richard answers all the questions we want answering. Richard's technical knowledge is excellent, he has detailed knowledge of pensions." Paul Male and Helen Lewis (GPs), Thornbury Health Centre
  • "The personal touch counts for a lot and the willingness to visit us at home is much appreciated. Richard provides an excellent, friendly, accessible service, not encumbered by jargon or salesmanship." Professor Peter Mathieson (Honorary Professor of Medicine), University of Bristol
  • "I can recommend Richard as providing measured, balanced independent financial advice. He listens very carefully and tailors advice appropriately in a knowledge-based manner. He is very accessible and gives his clients time and clarity in order to make the most sensible decisions for themselves based on the available facts." Andrew Medford (Consultant in Respiratory Medicine), Southmead Hospital
  • "Richard now knows me and understands my financial position. I have complete trust in his advice. The level of service I have experienced is second to none. We have received regular reviews in our own home, speedy and thorough advice to any queries." John Rees (General Practitioner, Specialist in Urology ), Blackwell and Nailsea Medical Group
  • "The advice I have received has dramatically altered my personal protection policies for the better and reduced my personal tax liability." John Rees (General Practitioner, Specialist in Urology ), Blackwell and Nailsea Medical Group
  • "I appreciate Richard's local knowledge and the fact that he is in contact with a lot of local general practitioners which is useful for networking. He is also very knowledgeable about the different pension schemes and their pros and cons." Fiona Hayes (General Practitioner) Bristol University Student Services
  • "I have enjoyed the process of dealing with a local advisor and it has not felt like a box ticking exercise. The service has been excellent. The great flexibility to come to my home at a time suitable to my working day has set this company apart from others I have dealt with in the past. The technical knowledge provided has been expertly tailored to my requirements and financial situation. The manner in which it has been delivered has also been first rate. " Beth Harrison (General Practitioner) Montpellier Health Centre
  • "We have regular meetings with the same adviser who knows our profile and keeps our requirements in mind with the plans he makes. The reviews are simple to organise and are always at a convenient time and location." Mike Bould (Orthopaedic Surgeon) Western General Hospital
  • "The service I have received from Wealth West is excellent! they are more personable and accessible than large firms and are not pushy at all. They also have a very good breadth and depth of knowledge." Billy and Annie Headdon (Anaesthetics and Intensive Care Trainee, General Practitioner) Montpelier Health Centre
  • "My experience of the service has been excellent. I have been able to ask many questions and have received excellent advice on my financial situation. The technical knowledge of Wealth West Medical is excellent. Anyone who can help my investments grow in the current environment clearly knows what they are doing. I would highly recommend Richard and Wealth West Medical." Linda Buczek (General Practice Manager) Bishopston Medical Practice
  • "The technical knowledge of Wealth West Medical is very good. Richard keeps up to date with the changes to the NHS pension scheme and new legislation." Melanie Lockett (Consultant) Southmead Hospital
  • "Wealth West Medical offers a friendly, helpful and efficient service. Richard keeps in touch at regular intervals and has a very good knowledge of pensions and investments." Rachel Brown (General Practitioner) Montpelier Health Centre
  • "Richard comes to my house for meetings and it is nice to see a familiar face. He remembers my details, and advises over the long term. Richard has a detailed understanding of my particular pension plan and has explained this very clearly to me. He has also helped me to manage tax payments for annual allowance and pension protection." Hugh Herzig (Consultant Psychiatrist) Southmead Hospital
  • .