Refunding your pension contributions

When are refunds of NHS pension contributions payable, how do you apply and is a refund good value for money?
Location: UK
Audience: All doctors
Updated: Tuesday 31 March 2020
Piggybank illustration

When you can have your contributions refunded

  • 1995/2008 section members can claim a refund of contributions if you have less than two years’ service at the date of your leaving, or opting out of the pension scheme.
  • 1995/2008 section members will be obliged to take a refund if they have a break of 12 months.
  • 2015 scheme members will be obliged to take a refund if they have a break of five years or more. 

 

When you cannot have your contributions refunded

  • If you have more than two calendar years’ of service.
  • If you joined the 2015 scheme having previously contributed to the 1995 or 2008 section, the qualifying service in the 1995 or 2008 section is aggregated with qualifying service in the 2015 to determine whether a refund is payable.
  • If you have less than two years but have transferred pension rights from a personal pension plan or retirement annuity contract.
  • If you have reached your pension age.

 

How to apply for a refund of contributions

If you are eligible for a refund you can apply immediately after leaving the NHS. 

If you do not apply for a refund the relevant pensions agency will write to you once you have incurred a disqualifying break (this is a break in service of 365 days or more in the 1995/2008 sections or a break of five years or more in the 2015 scheme). The letter will inform you of how to apply.

  • If you are contributing to the NHS pension scheme in England and Wales apply for a refund on form RF12.
  • If you are contributing to the NHS superannuation scheme (Scotland) apply for a refund on form REF1.
  • If you are contributing to the HSC pension scheme in Northern Ireland apply for a refund.

 

Is a refund good value for money?

Generally speaking, it isn’t. This is because:

  • all pension benefits built up so far are lost
  • employer contributions paid to the scheme are not refunded to the member
  • the refund is taxed at 20% if the refund is less than £20,000 and 50% on any amount above this level
  • there will be extra National Insurance contributions to pay.

 

Can I avoid taking a refund?

This might be possible in the following ways:

  • return to NHS pensionable employment within 365 days (1995 or 2008 section members) or within five years (2015 scheme members). Even if this is just for one day, this will ensure that a disqualifying break is avoided. This post must be pensionable. Agency work is not pensionable and would therefore not be sufficient to avoid a disqualifying break
  • work for an organisation covered by a direction arrangement. If you work for a direction employer, your NHS membership will be seen as continuous and you will not incur a disqualifying break.
  • take a period of approved unpaid leave or a sabbatical and continue to pay pension contributions. It may be possible, at your employer’s discretion, to agree a period of unpaid leave from the NHS, whilst continuing to pay contributions. If this unpaid leave exceeds six months you will be required to pay the employer contributions as well. Please see our guidance on authorised absences
  • continue to pay contributions during maternity leave. For more information on this, please see our guidance on maternity, paternity, adoption leave
  • obtain ‘approval’ to avoid a break in service caused by illness
  • obtain ‘approval’ for periods of work, training or study
  • ​transfer your benefits into another pension scheme.

 

Pensions refund letter without having left the NHS

This might be because you have changed jobs and are now working in a different  part of the UK. Your NHS pension is administered separately between the nations and does not automatically follow you on moving jobs. 

You will need to initiate a transfer yourself and should do this as soon as possible (and no later than 12 months after taking up your new post).  Please refer to our guidance on transfer of pension rights.

Additionally, if NHS pensions were unable to pay a refund following a disqualifying break as they did not have your contact details they will look to do this now even if you have since returned to NHS pensionable employment. It may only be possible to avoid this if your break is retrospectively approved.