How to calculate your NHS pension

The National Health Service (NHS) pension scheme is a long-term investment for future needs after retirement and a source of income after retirement. The NHS pension benefits are based on the highest salary in the last three years of contributing to the scheme. It important to know how to calculate the NHS pension for planning, decision making and pension forecast.

How to calculate the NHS pension

The pension benefits are calculated by multiplying the pensionable salary by the number of years one was contributing to the scheme multiply by 1/80ths. The 1/80ths is applied because the retirement pension is based on 1/80 of one’s pay at retirement for each year of contributing to the scheme. Members also get a tax-free pension lump sum which is the number of years’ service multiply by the best salary and 3/80ths. This means, the tax-free lump sum retirement is three times the pension benefits. The calculator can be found online on the NHS UK pensions website or the calculations can be obtained from the NHS pensions agency.

Why calculating the NHS pension

The calculations show the total amount one would receive on retirement, the tax-free lump sum amount, the monthly percentage and amount contribution to the scheme and what the employer pays towards the employee’s pension fund. It also calculates the basic pension one would get depending on how much money was paid to National insurance. The calculations help for decision making and future planning. NHS pension calculations are used NHS pension forecast situations such as ascertain if the pension amount will be adequate after retirement and if not, the need to pay NHS pension increased contributions by buying additional pension (AP). It enhances a peace of mind as one would be able to ascertain the amount he would receive on retirement. The calculations will also show the actuarial reduction computations for one retiring before the normal pension age of 60 years old for most staff or early retirement. Retirement calculators help to determine any changes to the NHS pensions which might affect one’s NHS choice. The contributions to the scheme depend on one’s salary, thus it is used in conjunction with the pay-check calculator to determine the net salary.