NHS & public sector pensions

Leaving the NHS — what happens to your pension?

You do not lose your NHS pension when you leave. The benefits you have built up are preserved as a deferred pension, revalued by CPI until you can draw them. Here is how it works, and what the transfer question actually involves.

By Pension Bible editorial team·Last reviewed 5 May 2026·5 min read

The two-year vesting period

Not every NHS employee who leaves is entitled to a preserved pension. NHSBSA says your pension will normally be deferred if you leave with more than two years of qualifying membership, or if you have less than two years but transferred another pension into the NHS Pension Scheme.

If you leave with fewer than two years of membership and have not transferred another pension into the scheme, you may be entitled to a refund of your own contributions, with tax deducted at 20% on the first £20,000 and 50% on any amount above that, representing the tax relief you received when the contributions went in. The employer's contributions are not returned — they stay in the scheme.

A contribution refund is a clean break, but it means you have no pension entitlement from that period of service. The NHS Pension Scheme does not usually allow you to simply "keep" a small deferred pension below the two-year threshold unless the transfer-in exception or another scheme-specific rule applies.

If you have more than two years of qualifying membership, a deferred pension is preserved. This is true regardless of how small the accrued amount is. A deferred NHS pension — even a modest one — is a guaranteed inflation-linked income for life, and it will be increased in line with the scheme's deferred-benefit rules.

Deferred pension: how it revalues

Once your benefits are deferred, NHS Pensions does not simply freeze the value. Deferred benefits are maintained by Pensions Increase so they do not lose their purchasing power against inflation in the same way as an active pension record.

2015 Scheme benefits: active-member revaluation is CPI + 1.5%. If you leave before claiming, NHSBSA says annual active revaluation stops and is replaced by Pensions Increase at retirement, which is designed to maintain the value of the pension against cost-of-living rises.

1995 and 2008 Section benefits: Revalued annually in line with Pensions Increase, which tracks the September CPI figure. The same Pensions Increase mechanism applies as for deferred 2015 Scheme benefits.

Pensions Increase is normally applied each April. If the relevant Pensions Increase is 4%, a deferred pension slice would broadly rise by 4%, subject to scheme rules and the period being increased.

Over a long deferral period, this compounds significantly. A 35-year-old who leaves the NHS with a deferred pension of £5,000 per year and does not draw it until 67 will receive substantially more than £5,000 per year in nominal terms by the time they retire — the CPI uplift will have accumulated for 32 years. But because deferred benefits no longer get the 1.5% above CPI, leaving the scheme materially weakens the long-term real value compared with staying in active service.

When you can access a deferred NHS pension

A deferred pension can usually be drawn from age 55 (rising to 57 from 6 April 2028), unless protected minimum pension age rules apply. However, drawing before normal pension age triggers an actuarial reduction.

The normal pension ages are:

• 1995 Section deferred benefits: age 60
• 2008 Section deferred benefits: age 65
• 2015 Scheme deferred benefits: state pension age, or age 65 if later

If you draw a deferred pension before normal pension age, the same actuarial reduction factors apply as for active members taking early retirement — approximately 3–5% per year before NPA, depending on the section.

You do not need to be employed or working to draw a deferred NHS pension. Once you reach the relevant age (and make the application), NHS Pensions will put the pension into payment.

To apply, contact NHS Pensions at least three months before your intended retirement date. Payments are made monthly.

Transferring out vs leaving deferred

When you leave the NHS, you may have a choice: leave the pension deferred (default) or transfer the cash equivalent transfer value (CETV) to another permitted scheme.

Transferring out means NHS Pensions calculates the present value of your future pension benefits and pays that value to a receiving pension scheme. The receiving scheme has to be permitted under NHS transfer rules and must accept the transfer.

The important restriction is that preserved NHS benefits generally cannot be transferred to a flexible-access defined contribution pension. BMA guidance says preserved benefits can only be transferred to another defined benefit scheme or to an overseas scheme listed as a qualifying recognised overseas pension scheme (QROPS). If you leave with less than two years' NHS pensionable service and no deferred-pension entitlement, a transfer to a defined contribution scheme may be possible within strict time limits.

What transferring out gives up:

A deferred NHS pension is a guaranteed, inflation-linked income for life. Transferring it out means:

• You give up the NHS Scheme's guarantee and survivor-benefit structure
• The receiving scheme's benefits, indexation and retirement options may be different
• If the transfer is to a permitted overseas or exceptional DC route, investment and longevity risk may move to you

CETVs are calculated using scheme actuarial assumptions. They are not the same as the open-market cost of buying an equivalent inflation-linked lifetime income, so the transfer value alone does not tell you whether a transfer is suitable.

Legal requirement: transfers of safeguarded defined-benefit rights worth more than £30,000 normally require regulated financial advice from an FCA-authorised pension transfer specialist before they can proceed. Advice should include a formal transfer analysis and a comparison with leaving the benefits in the scheme.

For a projection of what your deferred NHS pension might be worth at different retirement ages, use the NHS Pension Calculator. For broader context, the public sector pensions guide covers the DB versus DC comparison in detail.

Returning to NHS employment

If you leave the NHS, defer your pension, and subsequently return to NHS employment, your deferred benefits and new pension accrual are generally kept separate.

On returning to NHS employment, you will normally re-join the 2015 Scheme and begin accruing new benefits from the re-joining date. Your deferred benefits from the earlier period of service continue to revalue separately and are payable at their original normal pension ages.

In most circumstances, your earlier deferred benefits cannot simply be "merged" back into your new active membership. They remain as separate preserved benefits.

However, there are limited circumstances where a "rejoining" calculation applies if you return within a defined period after leaving with service in the 1995 or 2008 Section — the rules are scheme-specific and worth confirming with NHS Pensions if this applies to you.

The key practical point: leaving and returning to the NHS does not erase your deferred benefits. You retain everything you built up, and the new accrual adds to it at retirement.

This is factual information, not financial advice. For personal recommendations, speak to an FCA-regulated financial adviser and check the FCA register.