Maximising your pension

The NHS and New NHS Pension Schemes contain provisions for members to increase their benefits by paying additional contributions. Both schemes have the option to:

  • Buy an Additional Pension (AP) in multiples of £250 annual pension (up to a maximum of £5,000), either with or without dependant's cover, by lump sum or instalments over a complete number of years.

    Note: AP replaces the previous Added Years facility though existing added years contracts are being honoured – more on this below

  • Invest in a Money Purchase arrangement whereby additional contributions are made to another provider to build up a separate retirement fund. These contributions are invested and then used to supplement your main Scheme benefits at retirement or later.

NHS AVC Providers

Members of the NHS Pension Scheme (Amended April 2008) also have access to two further
arrangements. These are:

  • buying a bigger lump sum for Scheme membership before 25 March 1972;
  • buying back previously refunded Scheme membership prior to 6 April 1978 or for any period that you were a general practitioner.

All additional contributions qualify for full tax relief up to a limit set by HM Revenue and
Customs.

More information about these options can be found in the booklet Increasing your Benefits – SDAVC which is available in the members’ library. You are recommended to read all of this booklet and, if necessary, seek independent financial advice when choosing extra pension benefits.

More on Additional Pension

Members, or employers on their behalf, may buy additional annual pension that will provide a maximum of £5000* extra pension a year when they are retired.

Members may buy in instalments or by a lump sum payment. Where they buy in instalments they will be required to pay a fixed amount each month and commit to the purchase over whole years, up to a maximum of 20, or to normal retirement age if earlier. Employers buying on a member’s behalf can only do so by a lump sum payment.

The cost of this facility will depend on how much additional pension the member wants to achieve, and the length of time over which they are prepared to make the extra contributions.
The minimum commitment will be for extra contributions that will provide additional pension of £250 a year on retirement.

An additional pension calculator is available on this website.

More on Added Years (members of the NHS Pension Scheme only)

The facility to buy ‘added years’ as a way to increase an NHS pension is being replaced by the additional pension arrangements described above, but members of the NHS Pension Scheme (Amended April 2008) who have expressed interest in doing so before the deadline of 31 March 2008, have the opportunity to buy added years for a limited period following 1 April 2008.

Added years contracts are set up to start from the member’s next birthday. Purchases of added years can be made by the current method if the contract starts on their birth date, on or
before 31 March 2009.

To start a contract on a birth date after 31 March 2008, the member must have made an expression of interest by that date (ie 31 March 2008). This requirement was advertised to members in advance of this closing date, principally through a leaflet distributed with pay advice in November 2007.

*This amount is for 2008/09 and will increase in future years. In line with the Retail Price Index.