The 1995, 2008 and 2015 sections

Accrual rates, retirement ages, and how each one works out your pension.

The three parts of the scheme calculate benefits in genuinely different ways. Knowing which you have, and how much sits in each, is the starting point for everything else.

The 1995 Section

Closed to new members from April 2008.

Normal pension age: 60. Benefits taken earlier are actuarially reduced. Some members, notably those with Special Class or Mental Health Officer status, have protected earlier retirement ages.

Accrual: 1/80th of final pensionable pay for each year of service, plus an automatic tax-free lump sum of 3/80ths for each year. Twenty years' service produces a pension of a quarter of final pay, plus a lump sum of three quarters of final pay.

Pensionable pay is generally the best of the last three years before retirement.

The automatic lump sum matters for the annual allowance, because the growth calculation counts it separately from the pension, and a pay rise increases both at once.

The 2008 Section

Open to new members from April 2008 until the 2015 reforms.

Normal pension age: 65.

Accrual: 1/60th of reckonable pay for each year of service. A higher rate than the 1995 Section, reflecting the later retirement age.

No automatic lump sum. You can exchange pension for cash by commutation, generally at £12 of lump sum for every £1 of annual pension given up. That rate is poor value in most circumstances, because you're surrendering an inflation-linked income for life.

Reckonable pay is the best three consecutive years' pensionable pay in the last ten, revalued for inflation. More generous than the 1995 Section definition, and it matters if your earnings peaked before the end of your career.

The 2015 Scheme

All active members moved here on 1 April 2022.

Normal pension age: your State Pension age, which for most current members means 67 or 68.

Accrual: 1/54th of pensionable earnings in each year. A higher rate again, reflecting the later retirement age and the career average basis.

How it builds: each year you earn a slice of pension equal to 1/54th of that year's pensionable pay. That slice joins your pot of earned pension and is then revalued each year, both while you're working and after you leave.

Revaluation while in service is linked to inflation with an addition on top. That addition is part of what makes the 2015 Scheme genuinely valuable, and it's also part of what causes annual allowance problems, because revaluation counts as growth.

No automatic lump sum, with commutation available on the same basis as the 2008 Section.

What this means in practice

Your retirement ages differ by section. You might hold a 1995 Section pension payable at 60 and a 2015 pension payable at 67. Taking one early doesn't require taking the other early, and taking benefits before the relevant normal pension age means a permanent reduction.

Your pay definitions differ by section. The 1995 Section looks at your last three years, the 2008 Section at the best three consecutive of your last ten, and the 2015 Scheme at each year as you earn it.

A pay rise affects them differently. In the final salary sections it revalues your whole service history. In the 2015 Scheme it affects one year's slice.

That last point is why annual allowance charges cluster around promotions, and why a consultant receiving a significant award can face a charge in that year and nothing either side of it.

Contributions

Member contributions are tiered by pensionable pay, with higher earners paying a higher percentage. They come out before tax under a net pay arrangement, so relief is automatic at your marginal rate and there's nothing to claim.

The employer contribution is substantial and is a large part of why the scheme is worth what it is. It doesn't appear as income and it doesn't count towards your annual allowance, but the benefit it buys does. That distinction is the source of most of the confusion in this area.

This article is for general education only and isn't personal advice. Accrual rates, pay definitions and protections vary with your membership history, and the NHS Business Services Authority holds the authoritative record.