Opting Out of the NHS Pension: What You Gain and What You Give Up

What opting out adds, and what it costs (England, 2026/27)

The employer contribution doesn't come to you instead: it simply stops, and NHS Pensions never refunds employer contributions.

What else you lose

• –Life cover. Members who die in service get a lump sum of twice their pensionable pay, plus a pension for their spouse, civil partner or dependants. Out of the scheme, that stops.
• –Ill health retirement. If you become too ill to work, members can get their pension early, with no minimum age.
• –Revaluation. Each year's pension grows by inflation plus 1.5% until you retire. Pension you don't build up can't grow.

Take 5 years out at the bottom of Band 5 and you'd have about £2,970 a year less pension for the rest of your retirement, before revaluation, to save about £10,648 in take home over those years.

How to opt out

You and your employer both fill in the SD502 form (Application to leave the NHS Pension Scheme); it's the only way to opt out.

• –Opted out within a month of being enrolled? You get back what you paid in, as if you'd never joined.
• –Less than two years' membership? You can usually claim a refund with form RF12, but income tax is taken off and the employer's share isn't refunded. If you might come back within five years, leaving the pension in the scheme can be better: it's linked to your new membership and keeps being revalued.
• –Two years or more? Your pension stays in the scheme as a deferred pension, revalued until you claim it.

You'll be put back in

Employers have to re-enrol eligible staff into the pension every three years by law, so you'll need to opt out again if you still want to be out. You can rejoin at any time by asking your employer.

Try these first if money is tight

• –Claim tax relief on fees you must pay to work. If you pay your own NMC or HCPC registration, you can claim tax relief on it, backdated for up to four previous tax years.
• –Check your tax code. A wrong code, such as an emergency code after starting a new job, can mean paying too much tax until it's corrected.
• –Look at extra shifts. One weekend a month (15 Saturday and 7.5 Sunday hours) adds about £96 a month to take home at the bottom of Band 5, and you keep your pension; see the overtime calculator.
• –Ask your employer whether it has financial wellbeing support or a hardship fund.

When opting out can make sense

The cases are narrow, such as high earners facing annual allowance tax charges. If that might be you, get independent advice before you sign the form.