Pillar guide · Public sector pensions

UK public sector pensions — the complete guide.

NHS, Teachers', LGPS, and Civil Service pensions compared. Accrual rates, pension age, the McCloud remedy, and why opting out is almost always a mistake. Everything a public sector worker needs to know about their pension in 2025/26.

By Pension Bible editorial team·Last reviewed 8 April 2026·16 min read

What are public sector pensions?

If you work for the NHS, a school, a local authority, the civil service, the police, the fire service, or the armed forces, you almost certainly have access to a defined benefit (DB) pension scheme. These are fundamentally different from the defined contribution (DC) pensions that most private sector workers receive, and they are, by any reasonable measure, significantly more generous.

A defined benefit pension promises you a specific income in retirement, calculated from your salary and years of service. That income is guaranteed for life, no matter how long you live. It increases each year in line with inflation (CPI or Pensions Increase), so its purchasing power is protected. And the cost of providing it is overwhelmingly borne by your employer — the taxpayer — not by you.

The contrast with defined contribution pensions is stark. A DC pension is a savings pot: what you get out depends entirely on what goes in and how the investments perform. There is no guarantee, no inflation protection, and no promise of income for life unless you buy an annuity. A public sector DB pension eliminates all three of those risks.

This is not a small difference. An actuary would typically value a public sector DB pension at 25-35 times the annual pension income it provides. A nurse earning £35,000 per year who has built up a pension of £10,000 per year holds a benefit with a transfer value of roughly £250,000-£350,000. Most public sector workers dramatically underestimate what their pension is worth.

The big four public sector pension schemes

There are four main public sector pension schemes in the UK, each serving a different workforce. All four were reformed in 2015 (2014 for LGPS) to move from final salary to career average structures, but each has its own accrual rate, contribution tiers, and rules.

NHS Pension Scheme

The NHS Pension Scheme covers doctors, nurses, allied health professionals, and most NHS staff in England and Wales. It has evolved through three main iterations:

• 1995 Section — final salary, 1/80th accrual, normal pension age 60, plus an automatic tax-free lump sum of 3x pension. Now closed to new members.
• 2008 Section — final salary, 1/60th accrual, normal pension age 65, no automatic lump sum. Now closed to new members.
• 2015 Scheme — career average (CARE), 1/54th accrual, normal pension age equal to State Pension Age (currently 67, rising to 68). All active members are now in this scheme following the McCloud remedy.

Employee contributions are tiered based on whole-time equivalent pensionable pay, ranging from 5.1% for earnings up to £13,246 to 13.5% for earnings above £72,031. We have a dedicated NHS Pension Calculator that models all three sections, including the McCloud choice. You can also explore band-specific breakdowns like our Band 5 NHS pension page.

Teachers' Pension Scheme (TPS)

The Teachers' Pension Scheme covers teachers in state schools and many independent schools in England and Wales. Scotland has its own separate scheme (STPS).

• Pre-2007 arrangements — final salary, 1/80th accrual, normal pension age 60, plus automatic lump sum.
• 2007 arrangements — final salary, 1/60th accrual, normal pension age 65, no automatic lump sum.
• 2015 Scheme — career average (CARE), 1/57th accrual, normal pension age equal to State Pension Age.

Employee contributions range from 7.4% to 11.7% based on salary. The employer rate of 28.68% is the highest of the big four schemes, though most of this cost is invisible to the member. Our Teachers' Pension Calculator models all three arrangements with the McCloud transition built in.

Local Government Pension Scheme (LGPS)

The LGPS covers council workers, support staff in maintained schools, police civilian staff, and many other local authority employees. It is the largest DB scheme in the UK by total membership and, unusually among public sector schemes, is funded — meaning it holds actual invested assets rather than being paid from current taxation.

• Pre-2008 arrangements — final salary, 1/80th accrual, normal pension age 65, plus automatic lump sum of 3x pension.
• 2008-2014 arrangements — final salary, 1/60th accrual, normal pension age 65, no automatic lump sum.
• 2014 Scheme — career average (CARE), 1/49th accrual, normal pension age equal to State Pension Age. Note: LGPS reformed a year earlier than the other three schemes.

The LGPS has the most generous accrual rate of the big four at 1/49th. Employee contributions range from 5.5% to 12.5%. The scheme also has a unique 50/50 option allowing members to pay half contributions for half the pension build-up during periods of financial pressure — a far better option than opting out entirely. See our LGPS Calculator for detailed projections.

Civil Service Pension Scheme (alpha)

The Civil Service Pension Scheme covers civil servants across all government departments. The current scheme is called "alpha" (yes, lowercase).

• Classic — final salary, 1/80th accrual, normal pension age 60, plus automatic lump sum of 3x pension.
• Premium — final salary, 1/60th accrual, normal pension age 60, no automatic lump sum.
• Classic plus — hybrid of classic and premium.
• Nuvos — career average (CARE), 2.3% accrual (equivalent to 1/43.5), normal pension age 65.
• Alpha — career average (CARE), 2.32% accrual (equivalent to 1/43.1), normal pension age equal to State Pension Age.

Alpha is marginally the most generous of the big four schemes in terms of raw accrual rate, though the difference with LGPS is small. Employee contributions are between 4.6% and 8.05%, the lowest range of the four schemes. Employer contributions average around 27%. Our Civil Service Pension Calculator covers all five iterations.

Final salary vs career average — what changed in 2015

The 2015 reforms (2014 for LGPS) were the most significant change to public sector pensions in a generation. They moved all four schemes from final salary to career average (CARE) structures. Understanding the difference matters, because most current public sector workers will have benefits in both types.

Final salary means your pension is calculated using your salary at or near retirement. If you earn £50,000 at retirement and have 20 years of service at a 1/60th accrual rate, your pension is £50,000 x 20/60 = £16,667 per year. The key advantage: every pay rise you receive retroactively increases the value of every year you've already worked. A promotion in your last year boosts your entire pension.

Career average means each year of service earns you a pension based on your salary in that specific year, revalued annually for inflation. If you earn £30,000 in year one, you build up £30,000/54 = £556 of annual pension for that year (using the NHS 1/54th rate). That £556 is then increased by CPI each year until retirement. In year two, if you earn £32,000, you build up another £32,000/54 = £593, and so on. Your final pension is the sum of all these revalued slices.

Career average pensions are generally less generous for workers who receive significant late-career pay rises — the classic pattern for senior doctors, headteachers, and senior civil servants. They are roughly neutral for workers whose pay rises broadly track inflation throughout their careers, which describes the majority of public sector staff.

The government's rationale for the switch was cost: final salary schemes create unpredictable liabilities because they are tied to future (unknown) salary growth. Career average schemes are cheaper and more predictable for the employer, because the liability is fixed at the point each year of service is earned.

The transition: If you were in service before 2015, you may have benefits in both a legacy (final salary) scheme and the reformed (career average) scheme. Your legacy benefits are protected — they will still be calculated on a final salary basis using your salary at the point you leave service or retire. Your post-2015 benefits will be calculated on a career average basis. At retirement, the two amounts are added together.

The McCloud remedy — the 2015 reform's unfinished business

The McCloud remedy is one of the most complex and consequential pension developments in recent UK history. If you were in a public sector pension scheme before and after the 2015 reforms, it directly affects you.

What happened: When the 2015 reforms were introduced, the government provided "transitional protection" to members who were closest to retirement. Those within 10 years of their Normal Pension Age on 1 April 2012 stayed in the old (more generous) scheme. Younger members were moved to the new scheme immediately or after a tapered transition period. In 2018, the Court of Appeal ruled in the McCloud and Sargeant cases that this age-based protection was unlawfully discriminatory.

The remedy: To fix the discrimination, the government decided that all members who were in service both before and after the reforms would get a choice at retirement. For the "remedy period" (1 April 2015 to 31 March 2022 for most schemes, or 1 April 2014 to 31 March 2022 for LGPS), affected members can choose whether their benefits for that period are calculated under the legacy rules or the reformed rules — whichever is more favourable.

Who is affected: You are in scope if you were an active member of a public sector pension scheme on or before 31 March 2012 AND were still in active service on or after 1 April 2015 (1 April 2014 for LGPS). If you joined after those dates, you are not affected.

The choice: For NHS, TPS, and Civil Service members, the choice is made at retirement. You (or your scheme administrator) will compare the pension calculated under legacy rules with the pension calculated under reformed rules for the remedy period, and take whichever is higher. In practice, the legacy scheme will usually be more generous for members who received significant pay rises during the remedy period, because legacy schemes used final salary calculations.

The LGPS difference: LGPS handles the remedy differently. Instead of a choice at retirement, the LGPS applies an "underpin" — it automatically calculates benefits under both the old and new rules and pays the higher amount. This happens automatically, without the member needing to make an active choice. However, LGPS members should still check their annual benefit statements to ensure the underpin has been correctly applied.

The McCloud remedy is being rolled out in phases, and scheme administrators are still working through the calculations for millions of members. If you think you are affected, check your annual benefit statement or contact your scheme administrator directly. The remedy cannot reduce your benefits — it can only maintain or increase them.

Accrual rates compared

The accrual rate determines how much pension you build up for each year of service. A higher accrual rate means more pension per year worked. Here is how the big four schemes compare across their various iterations:

The standout figures: alpha and nuvos have the highest raw accrual rates, followed by LGPS 2014 at 1/49th. However, raw accrual rates don't tell the whole story — the old 1/80th schemes included an automatic tax-free lump sum on top of the pension, which makes the total value closer to the 1/60th schemes than the headline rate suggests.

For the career average schemes, the revaluation rate matters too. NHS and Civil Service pensions are revalued by CPI + 1.5%. TPS is revalued by CPI. LGPS is revalued by CPI. The NHS and Civil Service therefore build value slightly faster during your working life, partially offsetting the lower accrual rate compared to LGPS.

When all factors are considered — accrual rate, revaluation, automatic lump sums, and employee contribution rates — the four post-reform schemes are broadly comparable in generosity, with LGPS and alpha having a slight edge in most scenarios.

Normal pension age — when you can claim without reduction

Normal pension age (NPA) is the age at which you can draw your full pension without any actuarial reduction. Drawing earlier means a permanent percentage reduction; drawing later may mean a small increase.

The shift to State Pension Age (SPA) as the NPA for all post-reform schemes was one of the most significant changes in the 2015 reforms. For most current workers, SPA is 67, rising to 68 for those born after 5 April 1977 (subject to future review). This means a nurse who joined the NHS in 2020 has a normal pension age of 67 — seven years later than a colleague who was in the 1995 Section.

You can check your own State Pension Age using our State Pension Age Calculator.

Early retirement is possible in all schemes, typically from age 55 (rising to 57 from 6 April 2028 for benefits not already in payment). However, taking benefits early triggers an actuarial reduction — typically 3-5% per year of early drawing. On a pension of £20,000 per year, retiring three years early could reduce your income by £2,000-£3,000 per year for life. That is a permanent reduction, not a temporary one.

For members with benefits in both legacy and reformed schemes, each part has its own NPA. You could, in theory, draw your 1995 Section NHS benefits at 60 and leave your 2015 Scheme benefits accruing until 67. Scheme administrators can advise on the specifics.

Try the NHS Pension Calculator

The NHS Pension Scheme is the most searched of the four public sector schemes. Use the calculator below to model your projected pension across all three scheme sections, including the McCloud remedy choice.

For projections in the other three schemes, use our dedicated calculators: Teachers' Pension Calculator, LGPS Calculator, or Civil Service Pension Calculator.

Should you opt out?

Almost certainly not. This is the single most important message in this guide: do not opt out of your public sector pension scheme unless you have no other option.

The reason is simple arithmetic. Your employer contributes between 20% and 29% of your salary into the pension scheme on your behalf. If you opt out, that contribution vanishes — it does not get paid to you as salary instead. You lose it entirely. No defined contribution pension arrangement in the private sector comes close to replicating this level of employer funding.

Consider the NHS: the employer contribution rate is 23.7%. If you earn £35,000, your employer is contributing roughly £8,300 per year toward your pension on top of your salary. You contribute around £2,800 (at the 8.05% tier). The total going in is £11,100, of which you are funding less than a quarter from your own pocket. Even if you took your employee contribution of £2,800 and invested it perfectly in a low-cost SIPP — earning 5% real returns, paying 0.3% fees — you would need to contribute for decades to replicate the pension income that the DB scheme provides.

The employer contribution rates across the big four:

These are extraordinary numbers. A typical private sector employer contributes 3-5% to a DC pension. Public sector employers contribute four to eight times as much.

The only scenario where opting out is even debatable is severe short-term financial hardship. Even then, the LGPS offers a 50/50 option (half contributions for half pension) that is vastly preferable to opting out entirely. Some NHS staff on the lowest pay bands may also consider the contribution-salary trade-off, but the long-term cost of opting out almost always exceeds the short-term cash benefit.

If you are considering opting out to increase your take-home pay, first check whether salary sacrifice is available through your employer. Salary sacrifice restructures your pension contribution to save National Insurance — it increases your take-home pay without reducing your pension benefit. It is free money, and many public sector employers offer it.

Should you transfer out?

Almost certainly not. If anything, this section should carry an even stronger warning than the opt-out section.

Transferring out of a public sector DB pension means surrendering your guaranteed, inflation-linked, lifetime income in exchange for a cash transfer value placed into a defined contribution pot. Once you transfer, the guarantee is gone forever. You take on all the investment risk, longevity risk, and inflation risk that the DB scheme was protecting you from.

For DB pensions with a transfer value above £30,000 — which includes the vast majority of public sector pensions — you are legally required to take advice from an FCA-regulated financial adviser before transferring. This rule exists because the FCA found that the majority of DB transfers were not in the member's best interests. The starting assumption for any adviser is that you should stay in the scheme, and they must demonstrate clear reasons to justify a transfer.

There are very limited circumstances where a transfer might make sense:

• Serious ill health with a significantly reduced life expectancy, where a lump sum provides more value than a pension you may only draw for a few years
• No financial dependants combined with a strong desire to leave a larger inheritance (DB schemes typically pay reduced benefits to survivors, while a DC pot can be inherited in full)
• Emigration to a country where receiving a UK pension is impractical

For the vast majority of public sector workers, transferring out is a bad decision. The guaranteed income, inflation protection, and survivor benefits of a DB scheme are extremely expensive to replicate on the open market. If someone — whether a financial adviser, a colleague, or a social media commentator — is encouraging you to transfer out, treat that advice with extreme scepticism.

Additional pension purchases

All four schemes allow you to buy extra pension on top of what you earn through normal service. The mechanisms vary by scheme, but the principle is the same: you pay an additional contribution (either as a lump sum or through regular payroll deductions) and receive a specified amount of additional guaranteed pension at retirement.

NHS — Additional Pension (AP): You can buy up to £7,352 of additional pension per year (2025/26 limit). The cost depends on your age — younger buyers pay less because the money has longer to grow. Purchases can be made via regular contributions or a lump sum. Additional Pension is built up in the 2015 Scheme and revalued by CPI + 1.5%.

TPS — Additional Pension: Similar to the NHS scheme. You can buy additional pension in multiples, up to a scheme-specific cap. The cost is age-dependent and purchases must be completed before your Normal Pension Age.

LGPS — Additional Pension Contributions (APCs): You can buy up to £8,201 of additional pension per year (2025/26 limit). Uniquely, the LGPS offers shared-cost APCs where the employer pays two-thirds of the cost — this typically applies when buying back "lost" pension from a period of reduced pay or absence. Shared-cost APCs are extraordinarily good value.

Civil Service — Added Pension: You can buy added pension through regular or lump sum payments. The maximum purchasable amount is set by scheme rules. The cost increases with age.

Additional pension purchases can be particularly good value for members approaching retirement who want to boost their guaranteed income. The cost is often comparable to or better than the equivalent annuity purchase on the open market, with the added benefit that the pension increases in line with inflation. However, the decision should be based on your personal circumstances and other retirement savings — it is not universally right for everyone.

Death benefits and survivor pensions

Public sector pension schemes provide significant death benefits that are often overlooked when assessing the total value of membership. These benefits are included in your pension at no additional cost — you do not pay extra for them.

Death in service: If you die while an active member, most schemes pay a lump sum of two to three times your pensionable pay to your nominated beneficiary. In the NHS 2015 Scheme, this is two times pensionable pay. In the LGPS 2014 Scheme, it is three times. This is effectively a free life insurance policy worth £70,000-£150,000 for a typical public sector salary, and it is one of the most underappreciated benefits of scheme membership.

Survivor's pension: All four schemes pay a pension to a surviving spouse, civil partner, or qualifying partner. The amount varies by scheme and iteration:

• Post-2015 schemes: Typically pay 37.5% of the member's pension to a surviving partner. Some schemes pay 50% for pre-2015 service.
• Legacy schemes: Typically pay 50% of the member's pension. The older 1/80th schemes (which already had lower accrual) often paid more generous survivor benefits.
• Children's pensions: All schemes pay pensions to eligible children, typically until age 23 if in full-time education.

The survivor's pension is payable for the rest of the surviving partner's life, and it increases with inflation just like the member's own pension. For a member with a pension of £20,000 per year, the survivor's pension could be worth £7,500-£10,000 per year for the partner's lifetime — a benefit with a capital value of potentially £150,000-£200,000.

Nominating your beneficiary: Make sure your death benefit nomination is up to date. Complete a nomination form through your scheme administrator. If your personal circumstances have changed — marriage, divorce, new partner — update the form. Many schemes now accept cohabiting partners as qualifying partners, but only if properly nominated.

Reducing pension fees elsewhere

Public sector DB pensions have no investment fees — the scheme bears all costs. But most public sector workers also have other pension savings: a partner's DC workplace pension, an old pot from a previous private sector job, or personal savings in a SIPP. For those pots, fees matter enormously. See our guide to pension fees for how to check what you are paying and whether it is reasonable.

If your employer offers salary sacrifice for pension contributions, that is another way to increase your pension value at no cost. Our salary sacrifice guide explains how it works and why most public sector employers should be offering it.

FAQ

How much is my public sector pension worth? A rough rule of thumb: multiply your expected annual pension by 25-35 to get an approximate capital value. A pension of £15,000 per year is worth approximately £375,000-£525,000 in capital terms. The exact figure depends on your age, scheme rules, and current gilt yields. Your scheme can provide a Cash Equivalent Transfer Value (CETV) on request.

Can I be in a public sector pension scheme and also contribute to a SIPP? Yes. There is no restriction on holding both a DB public sector pension and a DC personal pension or SIPP. However, your total pension contributions across all schemes count toward the Annual Allowance (currently £60,000 per year). For DB schemes, the "contribution" for Annual Allowance purposes is measured by the growth in your pension value, not your actual contributions — which can catch higher earners off guard. Our annual allowance resources can help you check.

What happens to my pension if I leave the public sector? Your benefits are preserved. You retain a deferred pension based on your service and salary up to the date you left, revalued annually until you reach Normal Pension Age. You can also transfer the benefits to a new employer's scheme or a personal pension, but think very carefully before transferring out of a DB scheme (see above).

I work part-time — do I still build up a full pension? Your pension builds up based on your actual pensionable pay, not your full-time equivalent salary. If you work 0.6 WTE, you build up 0.6 of the pension you would have earned at full-time. However, your accrual rate, contribution tier, and normal pension age are the same as a full-time colleague. Part-time service is not penalised — it simply reflects the lower pay.

What is the difference between CPI revaluation and Pensions Increase? During your working life, career average benefits are revalued each year (by CPI, or CPI + 1.5% in some schemes). Once in payment, all public sector pensions increase each year by Pensions Increase, which is based on the September CPI figure. The two are related but applied at different stages. Both protect your pension's purchasing power against inflation.

Am I affected by the McCloud remedy? You are affected if you were in active service in a public sector pension scheme on or before 31 March 2012 AND remained in service on or after 1 April 2015 (1 April 2014 for LGPS). If you joined after these dates, the remedy does not apply to you. If you are affected, your scheme administrator will contact you, but you can also check by logging into your scheme's online portal or calling them directly.

Where can I find official information about my scheme? Each scheme has a dedicated member website: NHS Pensions (nhsbsa.nhs.uk), Teachers' Pensions (teacherspensions.co.uk), LGPS Member (lgpsmember.org), and Civil Service Pensions (civilservicepensionscheme.org.uk). These sites publish scheme guides, contribution rates, benefit calculators, and contact details for your scheme administrator.

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Pension Bible is an editorial publication, not a financial adviser. The information in this guide is general guidance based on publicly available scheme rules and legislation. For personal recommendations about your specific pension, speak to an FCA-regulated financial adviser. You can find one through Unbiased or VouchedFor.