Should I Opt Out of the NHS Pension?
See the real extra take-home, the employer contribution and pension you would give up, and the rules on refunds, rejoining and what a break would cost. Free, in your browser.
Last updated October 2026. Contribution tiers are the NHS Pensions 2026/27 rates. How we check our figures.
Short answer
Opting out gives you a modest, immediate gain: about £2,125 a year at £32,000 pay, less than the £2,656 you pay in, because the contribution is taken before Income Tax. In return you give up the employer's contribution (about 23.7% of pay, per NHS Pensions), £593 a year of pension for life for each year you stay in, death in service cover and enhanced ill-health protection. At two years' membership you can no longer take a refund, only a deferred pension. This tool does not tell you what to decide, and it is not financial advice.
Your details
Your member contribution tier is set from this: 8.3% for 2026/27. See how the tiers work.
In the 2015 Scheme this is your State Pension age (or 65 if later). We guess from your age; check yours on gov.uk.
Where do you pay Income Tax?
For the 2015 Scheme in England, where new members join. If you are in the 1995 or 2008 Section, the numbers differ, so use this as a guide only. The figures shown are an example.
If you opt out (example figures)
+£177 a month take-home
That is £2,125 a year. It is less than the £2,656 you pay in, because your contribution comes off your pay before Income Tax, so you would pay tax on the money you kept.
What goes into your pension each year, against what you would keep
The green bar is the cash you would keep, drawn to the same scale.
For every £1 more you take home, about £5 of pension funding is given up: your own £2,656 plus the employer's share.
NHS Pensions tells members the employer contributes about 23.7% of pensionable pay. You never receive it as cash if you opt out. Check your Total Reward Statement for your own figure.
What you would give up
- £593 a year of pension, for life, for each year you stay in. The 2015 Scheme banks 1/54 of your pensionable pay each year, and an active member's pension grows by CPI plus 1.5% a year. Over the 33 years to 68 on flat pay that is roughly £29,839 a year, before any pay rises.
- The employer contribution, about £7,584 a year at 23.7%.
- Death in service cover. For active members the lump sum is at least twice your earnings, about £64,000 at your pay, plus pensions for a spouse or partner and children. NHS Pensions says this cover does not apply once you are not in pensionable employment.
- Enhanced ill-health retirement. You need two years' membership for ill-health benefits. An active member can get Tier 1 (the pension earned, paid without reduction) or Tier 2 (Tier 1 plus an addition of half the pension you would have earned to Normal Pension Age). A deferred member can apply for unreduced early payment if too ill to work, but without the enhancement.
Is the cash worth it? Two ways to see it
About 3.6 years. One year in the Scheme buys £593 a year for life. The extra cash from opting out for that year is £2,125. So you would get that cash back, in pension, after about 3.6 years of retirement, and the employer share comes on top.
About 6.9% a year above inflation. If you invested the cash from one year of opting out, it would need to grow that much every year until 68, after charges and tax, to equal the value of the pension that year would have bought. That value uses the HMRC rule of thumb of 20 times the annual pension (£11,852), which is a valuation convention, not an annuity quote. Illustrative only.
Before you do anything: the rules
- To opt out you complete the NHS Pensions form SD502 and give it to payroll. Opting out by letter, email or in person cannot be accepted, and your employer cannot hand you the form, so download it from the NHS Pensions website.
- If your employer receives the form before the end of your first pay period you are treated as never having been a member. Otherwise opt-out takes effect from the first day of the next pay period.
- Under 2 years' qualifying membership you can usually take a refund of your own contributions (less tax), using form RF12, but not your employer's. With 2 years or more you cannot take a refund. You keep a deferred pension.
- Employers must re-enrol eligible staff into the Scheme every three years, and you would have to opt out again. You can rejoin at any time you are eligible, from the first day of the next pay period, but it cannot be backdated.
Source: NHS Pensions opting-out factsheet and 2015 Scheme members guide. Check the current forms and rules on the NHS Pensions leaving or taking a break page.
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What opting out gives and takes, at four pay levels
Built from the same functions as the calculator, for a 35-year-old paying Income Tax in England on the 2026/27 contribution tiers. The last column is how much pension funding, your own plus the employer's, is given up for each £1 of extra take-home.
| Pensionable pay | You pay in | Extra take-home | Employer adds (about 23.7%) | Pension banked a year | Given up per £1 gained |
|---|---|---|---|---|---|
| £24,000 | £1,560 (6.5%) | £1,248 | £5,688 | £444 | £6 |
| £32,000 | £2,656 (8.3%) | £2,125 | £7,584 | £593 | £5 |
| £55,000 | £5,885 (10.7%) | £3,762 | £13,035 | £1,019 | £5 |
| £80,000 | £10,000 (12.5%) | £6,000 | £18,960 | £1,481 | £5 |
The pattern is the same at every level: you get back well under what you pay in, and you walk away from a much larger employer contribution. At £32,000, a three-year break would add about £6,374 to your pocket and cost £1,778 a year of pension for life, plus £22,752 of employer contributions, in today's money.
Why the cash gain is smaller than your contribution
NHS Pension contributions are taken from your pay before Income Tax is worked out, so every £1 you pay in costs a basic-rate taxpayer about 80p, and a higher-rate taxpayer about 60p. Opt out and you keep the contribution but pay Income Tax on it. National Insurance is charged on your full pay either way. The calculator runs your pay through the same tax engine as our NHS Pay Calculator with and without the pension, so the gain it shows is the real difference in take-home pay.
How much does the NHS employer contribute?
NHS Pensions tells members that the employer contributes about 23.7% of pensionable pay in addition to your own contribution. It is paid on top of your salary and never appears on your payslip as pay, which is why it is easy to forget. Opting out means it stops, and you do not receive it as cash instead. We quote it as NHS Pensions' figure and not as a guarantee, because rates can change. Your Total Reward Statement shows the value for your own job.
What happens to my NHS pension if I opt out
- Two years or more of qualifying membership: no refund. What you have built up becomes a deferred pension, kept and revalued until you claim it. See deferred benefits explained.
- Under two years: you can usually claim a refund of your own contributions on form RF12, less tax. The employer's contributions are not refunded. A refund is generally the least beneficial option, so look at a transfer or a deferred pension first.
- Opting out before the end of your first pay period: you are treated as never having been a member, and your contributions are returned.
- Rejoining within five years without a refund or transfer links your earlier membership and keeps it revalued.
How to opt out of the NHS Pension, step by step
- Get form SD502 from the NHS Pensions website. Your employer cannot give it to you.
- Complete Part 1 and give it, with Part 2, to payroll. Letters, emails and verbal requests are not accepted.
- If you want a refund and have under two years' membership, also complete RF12.
- Opt-out starts from the first day of the next pay period after your employer receives the form, unless it arrives within your first pay period.
- Put the date three years ahead in your diary: you will be re-enrolled unless you opt out again.
Details and forms are on the NHS Pensions leaving or taking a break page. Our guide how to contact NHS Pensions helps if you have questions first.
Can I rejoin, and will I be auto-enrolled again?
You can rejoin whenever you are eligible and not absent from work, by applying in writing, with effect from the first day of the next pay period. It cannot be backdated, so the months you spent out do not count. Separately, your employer must re-enrol eligible staff every three years, which can catch out people who opted out for a short-term reason and forgot about it.
Death in service and ill-health cover
Active members have a death in service lump sum of at least twice their earnings, and pensions for a spouse, partner and children, and can apply for enhanced ill-health retirement: Tier 1 is the pension earned paid without reduction, and Tier 2 adds half the pension you would have earned up to Normal Pension Age. NHS Pensions says the death in service cover does not apply once you are no longer in pensionable employment. Read death benefits explained and ill health retirement explained.
NHS pension or a private pension: what the cash would have to earn
The NHS Scheme is a defined benefit pension: 1/54 of your pay each year, revalued every year at CPI plus 1.5% while you are an active member, paid for life. A private pension is a pot that depends on contributions, charges and growth. To compare, the calculator asks how much the cash from one year of opting out would have to grow above inflation, every year, to equal the value of the pension that year buys, using the HMRC rule of thumb of 20 times the annual pension. At £32,000 and 33 years to go, that is about 6.9% a year above inflation, after charges. It is an illustration, not a prediction. More in NHS pension vs private pension and should I max out my NHS pension or invest elsewhere.
Opting out because of the annual allowance
Some senior staff consider opting out to avoid an Annual Allowance charge. It stops future pension growth, but not a charge for a year you were a member, and carry forward and Scheme Pays often reduce or spread the cost. Check the facts first with our Annual Allowance Calculator, which models carry forward, the tapered allowance and Scheme Pays dates, and read the Annual Allowance guide.
⚠A planning comparison, not financial advice
This tool shows your own numbers and the rules. It does not say whether you should opt out. It is for the 2015 Scheme in England, and the 1995 and 2008 Sections work differently. If you are seriously considering it, speak to an independent financial adviser and your trust's pensions team.
Why trust this calculator
- ✓ Member contribution tiers are the NHS Pensions 2026/27 rates, and the cash gain is a real take-home difference from our tax and NI engine
- ✓ The employer contribution is quoted as NHS Pensions' own figure, flagged as something to confirm on your Total Reward Statement
- ✓ Refund, deferred pension, opt-out and re-enrolment rules come from NHS Pensions' factsheets and 2015 Scheme members guide
- ✓ The investment comparison states its assumptions and is labelled illustrative
- ✓ It never tells you to opt out or to stay in
- ✓ Runs in your browser. Your figures are saved only on your device, and you can clear them
Sources: NHS Pensions: leaving or taking a break, NHS Pensions: cost of being in the Scheme, 2015 Scheme members guide.
Related guides and tools
Is It Worth Opting Out of the NHS Pension?
The wider guide behind this tool.
NHS Pension Scheme (2015) Explained
Accrual, revaluation and tiers.
Deferred Benefits Explained
What you keep if you leave or opt out.
NHS Pension vs Private Pension
Defined benefit against a pot.
Annual Allowance Calculator
Check carry forward before considering opting out for tax reasons.
NHS Pension Calculator
See what you are building towards.
Common NHS Pension Mistakes
Including opting out too quickly.
NHS Pay Calculator
Your take-home with and without pension.