The NHS pension is often described as one of the most generous workplace schemes available. It provides a guaranteed, inflation-linked income for life, along with valuable benefits for your loved ones. But even with this strong foundation, many healthcare professionals find themselves wondering whether it will be enough to meet their retirement goals.
Recent changes to pension tax rules have opened new opportunities. With the Lifetime Allowance now abolished and increases to both the Annual Allowance and the Tapered Annual Allowance, there’s greater flexibility for healthcare professionals to boost their pension savings without triggering additional tax charges.
If you’re thinking about topping up your pension, it’s important to understand your options and what might work best for your circumstances.
Enhancing your NHS pension – what are your options?
There are a few recognised ways to pay more towards your retirement through or alongside the NHS scheme.
One popular method is the NHS Additional Pension Purchase, where you buy extra pension income directly through the scheme. This gives you a guaranteed income that rises with inflation and can also provide benefits for your dependants. It’s considered a secure and predictable option, without any investment risk, but it’s less flexible than other routes and becomes more expensive the older you are when you apply. The NHS Business Services Authority offers an online calculator that can help you estimate the cost and value of this option.
Another route is Early Retirement Reduction Buy-Out (ERRBO). This is available to members of the 2015 NHS Pension Scheme and is designed for those considering early retirement. It allows you to reduce or avoid the usual reductions that apply when you take your pension before the normal retirement age. It can be cost-effective if you’re certain about retiring early, but you do need to apply early in your career as it’s not permissible to make retrospective applications for previous years. The agreement can be for early retirement one, two or three years before your normal state pension age but no earlier than age 65.
Some healthcare professionals prefer a more flexible, investment-based approach. You can do this by paying into a Money Purchase Additional Voluntary Contribution (AVC) scheme through providers approved by the NHS, such as Standard Life or Prudential. These schemes allow you to build up a separate pension pot, which you can access from age 55 (rising to 57 in 2028). AVCs offer tax relief and flexibility, but the value of your pot will depend on investment performance and charges.
If you’re looking for even more control over your retirement savings, you could consider setting up a personal pension or SIPP (Self-Invested Personal Pension). This gives you complete freedom over how your money is invested and can be a useful way to diversify your retirement income. However, it does involve more decision-making and often benefits from financial advice. Like AVCs, personal pensions are also subject to market fluctuations and require careful monitoring.
What should you think about before deciding?
There are several tax and planning factors to bear in mind.
The Annual Allowance, which limits how much you can contribute tax-efficiently each year, is currently £60,000 for 2025/26. If your adjusted income exceeds £260,000, your allowance may be tapered down to as little as £10,000. However, many healthcare professionals can carry forward unused allowance from previous years, which may allow for larger one-off contributions.
It’s also worth remembering that all pension contributions benefit from tax relief at your highest marginal rate, making them a very efficient way to save. However, with the McCloud remedy in place, many members of the NHS Pension Scheme are seeing adjustments to their pension growth, which could affect their Annual Allowance position – so it’s important to keep this under review.
More flexible retirement options are also becoming available, including the ability to take part of your pension while continuing to work. This can give you more control over your income as you transition into retirement.
How to work out what’s right for you
There’s no one-size-fits-all solution, but there are steps you can take to make an informed decision.
Start by requesting your Total Reward Statement, which will give you a detailed picture of your NHS pension benefits. Then consider what income you’ll realistically need in retirement – thinking about your desired lifestyle, inflation, and how long your savings need to last.
Modelling different retirement scenarios – such as finishing work at 60 instead of 65 or using ERRBO versus a personal pension to allow early retirement – can also help you see the bigger picture. It’s important to factor in your personal attitude to risk, too. Some people prefer the certainty of guaranteed income, while others are happy to take some investment risk for the potential of greater returns.
Finally, make sure you understand how much Annual Allowance you’ve already used and whether you can carry forward unused amounts. This is especially important if you’re a high earner or have complex finances.
Expert support can make all the difference
Deciding how to top up your NHS pension and improve your retirement income can feel complicated. You need to weigh up tax rules, scheme features, investment risks and personal goals – and the stakes are high, because the decisions you make now can have a lasting impact on your future.
At Chase de Vere, we specialise in working with healthcare professionals. Our independent financial advisers have detailed knowledge of the NHS Pension Scheme and the wider pension landscape. We can help you explore your options, model different scenarios, and make confident, tax-efficient decisions that support your retirement goals.
Get in touch today to book a confidential, no-obligation consultation with one of our experts.
The information contained within this article is for guidance only and does not constitute individual financial advice.