Taking early retirement

We cover what voluntary early retirement is, if you should take your NHS pension early and how much your pension will be reduced by.

Location: UK
Audience: All doctors
Updated: Monday 7 September 2020
Piggybank illustration

Voluntary early retirement

This is when you voluntarily retire before your NHS pension scheme's normal pension age:

  • 60-years-old in the 1995 section
  • 65-years-old in the 2008 section
  • your state pension age in the 2015 scheme. 

If you take voluntary early retirement, your pension will be actuarially reduced to reflect that it is being paid before your normal pension age. It will therefore potentially be payable for longer.

When to apply

You need to apply for your pension four months in advance of your intended retirement date and you need to take a minimum 24-hour break between any further NHS employment in order to access your benefits.

Members of the 2008 section or the 2015 pension scheme who are partially retiring early (draw down) do not need to have a break in service. This is only a requirement for final retirement from these schemes. For more information on the required breaks, please see our returning to work after retirement guidance.

 

When can I retire?

You can retire any time between reaching your minimum pension age and your normal pension age/state pension age.

  • If you are a member of the 1995 section and have a protected minimum pension age, you can retire early between age 50 and 60. 
  • If you do not have a protected minimum pension age, you can retire early between age 55 and 60. 
  • If you are a mental health officer (MHO), you can retire early between 50 and 60, dependent on whether you have a protected minimum pension age. 
  • If you are a member of the 2008 section, you can retire early between age 55 and 65. 
  • If you are a member of the 2015 scheme you can retire early between age 55 and your state pension age

 

How to apply for your pension

Access the correct forms and read how to in:

Read further guidance on claiming your pension in:

 

How to know if you have protected minimum pension age in the 1995 section

You will have a minimum pension age of 50 if you are in the 1995 section of the scheme and you:

  • were an active member on 5 April 2006
  • were a deferred member on 5 April 2006, having left the scheme on or after 31 March 2000, or
  • were part of a bulk transfer into the NHS pension scheme on or after 6 April 2006, and qualified for a minimum pension age of 50 in the transferring scheme. 

Actuarial reduction

The term ‘actuarial reduction’ refers to the actuarial tables used to calculate the reduction to your benefits if you retire early.

The GAD (Government Actuary’s Department) calculates the reduction required based on mortality rates and other data. These factors can change from time to time.

You incur this reduction when your pension is paid earlier than normal and, therefore, potentially will be in payment for longer.

If you are contributing to the 1995 section the actuarial reduction is applied separately to both your pension and lump sum. 

If you are contributing to the 2008 section or the 2015 scheme the actuarial reduction is applied to your pension before commutation for the lump sum.

 

By how much will my pension and lump sum be reduced?

This depends on when exactly you retire. The actuarial reduction factors are based on your age in years and months. The closer you get to your normal pension age, the lower the actuarial reduction.

An extract from the current GAD factors are shown below:

Reduction in pension, 1995 section of the scheme

Age 50 51 52 53 54 55 56 57 58 59
RF 66.1 68.5 71 73.8 76.8 80 83.5 87.2 91.2 95.5

Reduction in lump sum, 1995 section of the scheme

Age 50 51 52 53 54 55 56 57 58 59
RF 78.9 80.8 82.7 84.7 86.7 88.8 90.9 93.1 95.4 97.7

Reduction in pension and lump sum, 2008 section of the scheme

Age 55 56 57 58 59 60 61 62 63 64
RF 62.6 65.3 68.2 71.3 74.6 78.1 81.9 86.0 90.4 95.1

Percentage reduction in pension in the 2015 CARE scheme

There is no reduction to any commuted lump sum which is calculated after the reduction to pension. 

Number of year from NPA 1 2 3 4 5 6 7 8 9 11 12 13
Pension 94.6 89.6 85.0 80.8 76.9 73.3 70.0 66.8 63.9 58.7 56.3 54

*RF = Reduction factor

View the full tables showing the monthly factors - see pages 1,2,9 and 24.

Please note that the factors differ between the schemes and between the nations. You will need to contact your relevant scheme administrator for details of the factors applicable to you.

View the 2015 pension scheme table for Scotland (PDF).

An example of how to apply these factors is shown below:

If you retire from the 1995 section (England and Wales) at age 59, having accrued a pension of £48,000 and a lump sum of £ 144,000, the reduced benefits payable at age 59 are:

Pension: £48,000 x 0.955  = £45,840
Lump sum: £144,000 x 0.977  = £140,688

Compensating for actuarial reduction

If you take early retirement from the 1995 or 2008 sections, it is not possible to pay to avoid the application of the actuarial reduction. If you are buying added years or additional pension these will also be subject to an actuarial reduction on account of non-completion of the contracts.

If you are retiring from the 2015 scheme it is possible to make a purchase for the ERRBO (Early Retirement Reduction Buy Out) which facilitates a retirement from age 65 without the reduction, further to the purchase of between one and three years of 'ERRBO'. 

You may wish to speak to an independent financial adviser to see if you have further options available to you outside of the NHS pension scheme in order to improve your benefits. 

 

Added years

If you are contributing to the 1995 section (or have transitioned to the 2015 scheme with an ongoing contract) and your added years contract is scheduled to end at the normal pension age (60), the added years that you have accrued up to the date of retirement are subject to the same reductions that apply to the main scheme benefits.

If you are contributing to the 1995 section (or have transitioned to the 2015 scheme with an ongoing contract) and your added contract is scheduled to end at age 65, the added years that you have accrued up to the date of retirement will still be subject to an actuarial reduction if you retire after 60 but before age 65.

 

Pensions increases

Pensions increases will apply if you retire early. However, if you have retired before age 55 from the 1995 section, the payment of the increase is delayed until your 55th birthday when you will receive the full pensions increase.

 

The capital value of your benefits

The capital value of your benefits will be reduced because they are calculated with reference to the actuarially reduced pension and lump sum (where relevant). Therefore, retiring early may assist you if your NHS benefits are in excess of the standard lifetime allowance

Although the annual allowance is usually tested with reference to accrued benefits, in the year that you retire it will be tested against the benefits actually put into payment. This will have the effect of restricting your pension growth during your final year. ​