The 2015 NHS Pension Scheme is a Career Average Revalued Earnings (CARE) Scheme. The Scheme is a defined benefit pension scheme which means that it guarantees a certain level of benefit payable to you at retirement. The rate at which a doctor's pension builds up is based on four factors, these are:
1. Build up rate
The build up rate is a fraction of your pensionable earnings, for this scheme the build up rate is 1/54th. For example, if a doctor earns £54,000 in a year, then his/her pension income built up in that year would be 1/54 x £54000 = £1000 for that year.
2. Annual Revaluation
For each year of membership of the scheme, a doctor's accrued pension income is increased automatically - this is known as revaluation. The revaluation rate is determined by the Treasury Orders + 1.5%. The pension earned in a Scheme year is revalued on the 1st April of the following Scheme year.
3. Length of Scheme membership
A doctor can build up pension rights in the 2015 NHS Pension Scheme until the age of 75. The more years of membership a doctor has, the greater the number of annual pensions they will accrue.
4. Pensionable Earning
A doctor's annual pension contribution is a percent of their income earned for NHS work, this includes salary, wages and fees, but not bonuses or payments to cover expenses. If a doctor's pay goes up in a Scheme year, then their contribution for that Scheme year will be more, compared to the previous year.
A doctor's annual pension payable at retirement is the sum of all of the revalued pensions earned in previous years of membership.