Thinking about retiring from the NHS? Here's what you need to know

Retirement. That magical word that brings up images of lie-ins, long lunches, pottery, travelling the world or even just binge-watch everything on Netflix guilt-free. If you work in the NHS and are thinking of hanging up your stethoscope, clipboard, or keyboard – you're probably wondering: What are my options?

Well, good news! The NHS has been making some changes to make retirement a bit more flexible and a lot less “one-size-fits-all.”

Option 1: Full retirement – the traditional route

This is the traditional option. You stop working, take your pension, and start living your best, retired life. Simple, right?

When can you retire?

• You can take your NHS pension from age 55, but your Normal Pension Age (NPA) depends on which scheme you're in:
• 1995 Section: NPA is 60 (or 55 for some with special rights).
• 2008 Section: NPA is 65.
• 2015 Scheme: NPA is linked to your State Pension Age (currently between 66 and 67 for most people).

If you retire before your NPA, your pension will be reduced to account for the extra years it’ll be paid out – this is called an actuarial reduction.

How to apply

• You need to give notice, usually at least six months before your planned retirement date.
• You and your employer will need to complete sections of the AW8 form (the official retirement application).
• NHS Pensions will then calculate your benefits and send you a breakdown.

Tax and pension increases

• Your pension is taxable, just like a salary.
• Every April, your pension may go up with inflation – this is called the Pensions Increase (PI). In 2025, for example, pensions increased by 1.7%.

Option 2: Partial retirement

From October 2023, if you’re in the 1995 Section, you can take part of your pension without actually leaving your job.

You can reduce your hours, ease into retirement, and get some pension money coming in.

Who can do it?

• You need to be at least 55 years old.
• You must still be working in the NHS and be an active member of the NHS Pension Scheme.
• You’ll need to agree with your employer to reduce your pensionable pay, or if a GP practitioner you will need to reduce sessions, by at least 10% – this could mean fewer hours, a less demanding role, or a change in responsibilities.

How much pension can you take?

• You can take between 20% and 100% of your pension benefits.
• You can do this in one or two drawdown payments.
• You’ll still be working and building up new pension benefits in the 2015 Scheme while receiving the pension you’ve drawn down.

Timing rules

• Your reduction in pensionable pay must last at least 12 months after you take partial retirement.
• You can still do non-pensionable work like overtime or bank shifts – just make sure it doesn’t count toward your pension.
• If you’ve got more than one NHS job, the 10% reduction has to apply across your combined pensionable pay.

A few things to watch out for

• If you’re in the 1995 Section and under 55, you’ll need to take 100% of your benefits from that section if you want to draw them early.
• If you’ve already taken partial retirement twice, you can’t do it again.
• If you’ve had a break of 5 years or more, your older pension benefits might not count toward your partial retirement.

Before you apply, you and your employer need to agree on your new working arrangement – and that agreement has to be in place before they send off your application. So don’t leave it until the last minute!

Option 3: Retire and return

Already retired but missing the buzz of the NHS (or just fancy a bit of extra income)? You can come back to work and still keep your pension. Just make sure you fill out the right forms and follow the rules.

The 24-hour rule

Before you can return to work, you need to take a minimum break of 24 hours from NHS employment.

What kind of work can you do?

• You can return to any NHS role, full-time or part-time.
• You can even re-join the 2015 NHS Pension Scheme and start building up more pension benefits – yes, even after you’ve started drawing your old pension.
• Your new job doesn’t have to be the same as your old one.

Will it affect my pension?

Nope! As long as you’ve followed the rules (like the 24-hour break), your pension will keep being paid while you work. Just remember, your earnings from your new job will be taxed as normal, and your pension is still taxable income too.

A few things to keep in mind

• If you’re under Normal Pension Age and you return to work too soon or without the proper break, your pension payments might be suspended.
• If you’re in the 1995/2008 Section, you can’t build up more benefits in that section – but you can in the 2015 Scheme.
• Your employer might have their own local policies on retire and return, so have a chat with them before making any decisions.

Need help? Retirement, your way

Whether you want to go all-in on retirement, ease into it slowly, or keep a toe in the NHS waters, there’s a selection of options to fit your lifestyle. The key is to plan ahead and you can check your pension details on the My NHS Pension portal.

If you need any advice or guidance, please get in touch with your usual Larking Gowen contact or email enquiry@larking-gowen.co.uk.

Jamie Butcher