NHS Pension 2015 Scheme: A Nurse’s Guide to CARE, Contributions and McCloud

The NHS Pension 2015 Scheme is the single most valuable employee benefit you get as a nurse, and the one most likely to be ignored on your first payslip. This guide explains how the CARE scheme builds your pension, the 2026/27 contribution tiers, what the McCloud remedy means (and why it probably does not affect you if you qualified recently), death and ill-health benefits, and the opting-out debate.

If you joined the NHS as a registered nurse from 2015 onwards, you are almost certainly a member of the 2015 NHS Pension Scheme. It is a career average (CARE) defined-benefit scheme, which means the pension you eventually get is guaranteed by the scheme based on your salary history — not on the stock market. That guarantee is what makes it unusually good. Even after the 2015 reforms, the NHS pension remains one of the best workplace pensions in the UK.

Everything below uses figures confirmed for 2026/27. Pension rules change, and the McCloud remedy is still being administered, so always check NHSBSA and NHS Employers for the latest position before making a decision about opting out or retiring.

How the 2015 CARE scheme builds your pension

CARE stands for Career Average Revalued Earnings. Every year you are a member, you build up a pension worth 1/54th of your pensionable pay for that year. That pot of pension is then revalued each year in line with inflation (measured by CPI) plus 1.5% while you are still paying in, to protect it from being eroded. At retirement, all of those annual slices, revalued, are added up and paid to you as an annual income for life.

So a Band 5 nurse earning £32,073 in 2026/27 builds up 1/54th of that — about £594 — of annual pension, just for that one year. That £594 gets revalued upwards every year until retirement. By the time you retire in 40 years, even modest revaluation means that single year’s membership could be worth well over £1,500 a year, every year, for the rest of your life. Multiply that across a 40-year career and the numbers become very large.

Your Normal Pension Age (NPA) in the 2015 scheme is linked to your State Pension Age — currently 67 for most working-age nurses, with a planned rise to 68 under review. You can choose to retire earlier and take a reduced pension (actuarial reduction), or work beyond NPA and get an enhanced pension. You do not have to stop working to start drawing it; you can draw your pension and carry on working (subject to pension recycling rules).

What you pay in: 2026/27 member contribution tiers

Member contributions are a percentage of your pensionable pay, and the rate depends on which tier your total pensionable pay falls into. The tiers are updated each April. From 1 April 2026, the rates are:

A Band 5 nurse at the 2026/27 entry point of £32,073 sits in the 8.3% tier — so annual member contributions are around £2,662, or about £222 a month. But because contributions are deducted from gross pay and you get tax relief at your marginal rate, the real cost to a basic-rate taxpayer is closer to 6.6% of take-home, or about £177 a month. Higher-rate taxpayers get relief at 40%, making it even better value. If you work in London, your high-cost area supplement (HCAS) is pensionable too, which can push you into a higher tier — check your payslip.

Your employer — the NHS trust — pays far more. The full employer contribution rate is 23.7% of pensionable pay (plus a 0.08% administration levy), set by HM Treasury following the actuarial valuation. A transitional funding arrangement means trusts pay 14.38% directly to the scheme and the remainder is covered by central funding, but the value to you is the full 23.7%. For every pound you put in, the employer puts in roughly two to three pounds. That is the single biggest reason opting out is almost always a mistake.

Part-time nurses and additional hours

If you work part-time, your pension builds up pro-rata based on your actual pensionable earnings. A rule change from April 2025 clarified that any additional hours you work up to your whole-time equivalent (WTE) are automatically pensionable. If you worked extra hours between April 2015 and March 2024 that were not pensioned, your employer should have written to you — if they did not and you think you are affected, chase them. Those hours add to your pension, and it is worth getting right.

The McCloud remedy: what it is and whether it affects you

To understand McCloud, you need a bit of history. Before 2015, NHS staff were in the 1995 or 2008 legacy schemes — final-salary schemes with a Normal Pension Age of 60 (1995 section) or 65 (2008 section). The 2015 reforms moved everyone to the CARE scheme with NPA linked to State Pension Age. Older members were given transitional protection, which meant younger members moved to the less generous scheme sooner. The Court of Appeal ruled in 2018 (the McCloud/Sargeant judgement) that this transitional protection was unlawfully discriminatory on the grounds of age.

The remedy has two parts. The prospective remedy closed the legacy schemes to all future accrual from 1 April 2022, so everyone now builds benefits in the 2015 CARE scheme. The retrospective remedy, which took effect from 1 October 2023, addresses the discrimination that happened between 1 April 2015 and 31 March 2022 — the “remedy period”. Eligible members (those who were in the scheme on or before 31 March 2012 and had continuity of service) will, at retirement, be offered a deferred choice underpin: they can choose to take either legacy (1995/2008 final-salary) benefits or 2015 CARE benefits for the remedy period, whichever is better for them. Retired members receive a Remediable Service Statement (RSS) setting out both options; NHS Employers expects most affected retired members to receive their choice by the end of December 2027.

Death benefits: what your family gets if you die in service

This is the part no one likes to think about, and it is the part that makes opting out as a young nurse particularly hard to justify. In the 2015 scheme, if you die while an active member, your eligible adult dependant receives a survivor’s pension for life, and your eligible children receive children’s pensions until they finish education (or longer if they are dependent due to disability). On top of that, there is a death-in-service lump sum — in the 2015 scheme this is twice your annual pensionable pay — paid tax-free to your nominated beneficiary or estate. For a Band 5, that is a lump sum in the region of £64,000, plus an ongoing income for a partner and children.

You should nominate your beneficiaries — fill in the form on the NHSBSA member hub and keep it up to date, especially if you marry, enter a civil partnership, divorce, or have children. If you do not nominate, the scheme managers have discretion and it can take longer for your family to receive the money. If you opt out of the pension, you lose the death-in-service cover entirely; you would need to replace it with private life insurance, which at nursing ages with shift work is rarely as cheap as people assume.

Ill-health retirement: the two tiers

If you become too unwell to work, the 2015 scheme has two tiers of ill-health retirement. Tier 1 applies if you are permanently unable to perform the duties of your own job but could do other work — you receive the pension you have built up so far, paid immediately with no actuarial reduction, but no enhancement. Tier 2 applies if you are permanently unable to undertake any gainful employment — you receive your accrued pension plus an enhancement that effectively credits you with some of the pension you would have built up between ill-health retirement and your Normal Pension Age. The exact enhancement depends on your circumstances and is calculated by NHSBSA.

For nurses, this matters. Nursing is a physically and psychologically demanding job. Back injuries, mental ill health, and long Covid are all real reasons a nurse might need to leave the profession earlier than planned. The ill-health retirement protection is insurance you get for free as a scheme member. Opt out and you lose it.

The opting-out debate: why a Band 5 should almost never opt out

Every few years, when money is tight, a newly qualified nurse asks whether opting out of the NHS pension is worth it to free up a couple of hundred pounds a month. The honest answer, for the overwhelming majority of Band 5 nurses, is no. Here is the arithmetic. You pay in roughly 6.5–8.3% of salary (after tax relief, less). Your employer pays in 23.7%. You get guaranteed index-linked income in retirement, life cover worth twice your salary, and ill-health protection. If you opt out, you keep your contribution but you walk away from the employer’s 23.7% — that is a pay cut of nearly a quarter of your pensionable pay, and you lose the insurance benefits.

The only scenarios where opting out can even be argued are: you are in such severe short-term financial difficulty that the monthly contribution is the difference between paying rent and not (and even then, you can usually take a payment break or seek hardship help rather than formally opt out); or you are a very high earner approaching the annual allowance tax charge (see below), which does not apply to Band 5, 6 or most Band 7 nurses. If you are tempted, speak to an independent financial adviser and your union — the RCN has pension advice. Do not opt out on the basis of a TikTok.

Annual allowance, the taper, and why it mostly is not your problem yet

The annual allowance is the maximum amount your pension can grow in a tax year before you face a tax charge. For 2026/27 it is £60,000 (it was raised from £40,000 in April 2023). For very high earners — those with “threshold income” over £200,000 and “adjusted income” over £260,000 — the annual allowance tapers down, to a minimum of £10,000. This is the “pension tax” that famously caused some senior consultants and GPs to reduce their hours. The lifetime allowance was abolished from April 2024, so there is no longer a lifetime cap on pension savings.

As a Band 5, 6 or even 7 nurse, your annual pension growth will be nowhere near £60,000, so the annual allowance does not affect you. It is worth knowing about because if you eventually become a very senior nurse, a medical director-level role, or a GP, it could matter — and because the annual allowance is why some senior staff opt out of the pension, which is sometimes misquoted as advice that applies to everyone. It does not. Carry-forward of unused annual allowance from previous three years is also available if you ever do get close.

State pension, contracting-out, and your total retirement income

Your NHS pension is separate from, and in addition to, the State Pension. To get the full new State Pension (2026/27 rate set annually; around £220 a week in 2024/25, uprated each year), you need 35 qualifying years of National Insurance contributions. As a full-time NHS employee you build NI years automatically.

A historical note: before April 2016, members of the 1995/2008 NHS pension schemes were “contracted out” of the State Second Pension (SERPS/S2P) and paid a lower rate of National Insurance. That means some older nurses may have a small reduction in their State Pension, and the old “contracting out” deduction appeared on payslips as a lower NI rate. Since April 2016, contracting out has ended and everyone pays the full NI rate and builds the new State Pension. If you have gaps in your NI record — for example, years spent abroad or caring — you can sometimes make voluntary Class 3 NI contributions to fill them; check your State Pension forecast on gov.uk. It is worth doing in your 20s and 30s, not at 65.

For the full picture of how pension contributions, tax, NI and student loan combine on a Band 5 payslip, read the Band 5 Nurse Salary & Take-Home Pay UK guide. For everything pay- and money-related as a new nurse, the Money Hub is the place to start.

Top-ups: additional pension, AVCs and added years

If you want to save more toward retirement, the NHS scheme offers ways to top up. You can buy Additional Pension (a fixed extra annual amount, paid for by regular contributions or a lump sum), open a separate Additional Voluntary Contribution (AVC) with the scheme’s provider, or — if eligible — buy Added Years (largely closed to new entrants). For most nurses, the first question is whether you are using your full ISA allowance and whether you have any expensive consumer debt; AVCs and additional pension come after that. If you are going to pay more into a pension, the NHS scheme’s additional pension is usually better value than a private pension because of the employer-related terms, but take independent advice if you are committing significant money.

Your Total Reward Statement: check your pension every year

Once a year, NHSBSA issues you a Total Reward Statement (TRS) — an online statement showing your pension benefits to date, your projected pension at retirement, and the total value of your employment package including employer pension contributions, life cover and NHS discounts. Log into the NHSBSA member hub and read it. Mistakes happen: service missing from your record, wrong pensionable pay recorded, part-time hours not counted. If you spot an error, raise it with NHSBSA and your employer immediately — errors are far easier to fix in the year they happen than twenty years later when you retire. Your TRS is also a useful reality check on exactly how much your employer is putting in on your behalf; seeing the 23.7% figure in black and white tends to end the opting-out debate for most people.

While you are logged in, check your service record. If you worked as a healthcare assistant, bank nurse or agency nurse in the NHS before your degree, some of that service may be pensionable or may count toward your employment history. If you worked in the NHS in Scotland, Wales or Northern Ireland and then moved to England, your pension record should follow you, but the transfer of records is not automatic — verify it. Gaps in your service record directly reduce your pension.

If you leave the NHS: deferred benefits and transfers

Not every nurse stays in the NHS forever. If you leave to work in the independent sector, for an agency, or abroad, your 2015 Scheme pension does not vanish. It becomes a deferred (preserved) pension: it stays in the scheme, revalued each year in line with CPI (the in-service CPI-plus-1.5% revaluation stops, but inflation-linking continues), and is paid to you at your Normal Pension Age. You do not have to do anything. You can also, if you wish, apply for a transfer value to move the pension to another registered pension scheme — but for a defined-benefit scheme like the NHS pension, transferring out is almost always a bad deal, and financial advisers are required by the regulator to warn you of that. The guaranteed index-linked income you are giving up is rarely matched by a personal pension. If you are tempted, take independent financial advice — and if the adviser is being paid commission on the transfer, get a second opinion.

If you return to the NHS later, you can rejoin the scheme and your new membership builds alongside your deferred benefits. There is no penalty for having a break, though a break in pensionable service does mean fewer years of accrual, which is why returning sooner rather than later is usually financially better.

Retiring early, late, or phasing it

Your Normal Pension Age in the 2015 scheme is your State Pension Age. You can retire from age 55 (rising to 57 in 2028 under current rules) and take your pension immediately, but it will be reduced by an actuarial factor to reflect the longer period it will be paid. Conversely, if you work beyond your NPA, your pension is enhanced for each year you delay, and you can also draw your pension while continuing to work — “retire and return” — subject to limits on how much you can earn without affecting your pension (the earnings limit, reviewed annually). Phased retirement, where you reduce your hours and draw part of your pension, is also available from age 55. For nurses, the physically demanding nature of the job means early retirement is sometimes a real consideration; if that is you, plan it with an independent financial adviser and look at your TRS projection early, because the size of the actuarial reduction may surprise you.