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NHS Pension Scheme

Also known as: NHS Pension, Public Service Pension

Definition

The NHS Pension Scheme is a defined benefit pension plan for NHS employees that provides guaranteed retirement income and death benefits outside of your estate.

Understanding how your NHS pension fits into your estate planning is essential when making your will. Unlike your property or savings, NHS pension death benefits don't pass through probate or follow your will's instructions—they're distributed according to scheme rules and your nomination forms.

What Does NHS Pension Scheme Mean?

The NHS Pension Scheme is a statutory defined benefit pension for NHS employees in England and Wales, governed by the NHS Pension Scheme Regulations 2015 (and earlier 2008 and 1995 regulations for legacy members). Unlike personal pensions where retirement income depends on investment performance, the NHS scheme guarantees specific benefits calculated according to a legal formula based on your earnings and service. This makes it one of the most valuable employee benefits in the UK.

The scheme has three sections depending on when you joined. The 1995 Section provides benefits accruing at 1/80th of final salary with retirement at age 60. The 2008 Section offers 1/60th accrual with retirement at 65. The 2015 Scheme operates on a career average basis, with benefits accruing at 1/54th and revalued annually by CPI plus 1.5%, with retirement linked to State Pension Age. Which section you're in affects how much pension you build each year and when you can retire without reduction.

Beyond retirement income, the NHS Pension Scheme provides significant death benefits that are crucial for estate planning. If you die before retirement, the scheme pays a lump sum (typically double your pensionable pay) plus potential ongoing pensions for eligible survivors like your spouse or dependent children. Sarah, an NHS nurse with £38,000 pensionable pay, died unexpectedly. Her death in service lump sum was £76,000. Because Sarah completed form DB2 nominating her sister, the £76,000 was paid directly within weeks, bypassing probate. Without the nomination form, the money would have defaulted to Sarah's estate, delaying access and potentially triggering inheritance tax.

Critically, NHS pension death benefits do NOT form part of your estate and are not distributed according to your will—they're paid according to NHS Pension Scheme rules and your nomination forms. Two key forms exist: DB2 (for nominating who receives lump sum death benefits) and PN1 (for nominating an unmarried partner for adult dependant's pension). Without completed nomination forms, death benefits may default to your estate, causing delays and potentially triggering unnecessary inheritance tax charges.

Common Questions

"Do I need to mention my NHS pension in my will?" No, your NHS pension doesn't automatically form part of your estate and shouldn't be mentioned in your will. However, you should complete NHS pension nomination forms (DB2 for lump sum death benefits, PN1 for partner pensions) to ensure benefits go to your intended recipients. Without nominations, lump sum benefits may default to your estate and potentially face inheritance tax.

"What happens to my NHS pension if I die before retirement?" If you die before retirement, the NHS Pension Scheme provides death in service benefits including a lump sum (typically 2 times your pensionable pay) and potentially a pension for your spouse, civil partner, or nominated partner. These benefits are paid according to your nomination forms, not your will, which is why completing NHS pension nominations is crucial.

"Can my unmarried partner receive my NHS pension death benefits?" Yes, but only if you've completed the correct nomination forms. For lump sum death benefits, use form DB2 to nominate your partner. For an adult dependant's pension, complete form PN1 to nominate your partner. Without these forms, unmarried partners have no automatic entitlement to NHS pension death benefits, regardless of what your will says.

Common Misconceptions

Myth: My will covers my NHS pension death benefits.

Reality: Your NHS pension death benefits are completely separate from your estate and are not distributed according to your will. Death benefits are paid according to NHS Pension Scheme rules and your nomination forms (DB2 and PN1). Your will only controls assets that form part of your estate, such as property, savings, and personal possessions. To ensure NHS pension death benefits go to your intended recipients, you must complete the appropriate nomination forms held by NHS Business Services Authority.

Myth: My spouse will automatically get my NHS pension if I die, so I don't need to fill out nomination forms.

Reality: While married spouses and registered civil partners have some automatic entitlements to NHS pension survivor benefits, you should still complete nomination forms. For lump sum death benefits, the scheme has discretion over who receives payment—your DB2 nomination form guides this decision. More importantly, if you have an unmarried partner, they have absolutely no automatic rights to death benefits regardless of how long you've lived together. Only nomination forms (PN1 for partner pension, DB2 for lump sum) give unmarried partners any entitlement.

  • Pension Nomination: The general process of nominating beneficiaries for pension death benefits, which you apply by completing NHS-specific forms DB2 and PN1.
  • Death in Service: The type of life assurance benefit NHS pension provides, offering a lump sum typically double your pensionable pay if you die while working.
  • NHS Pension Death Benefits: Comprehensive coverage of all death-related benefits within the NHS scheme, including lump sums, survivor pensions, and children's pensions.
  • Defined Benefit Pension: The broader category of pension that guarantees specific benefits based on a formula rather than investment returns, of which NHS pension is a valuable example.
  • Nomination Form (NHS): Step-by-step guidance on completing the specific NHS forms DB2 and PN1 that control who receives your death benefits.

Need Help with Your Will?

While your NHS pension death benefits don't pass through your will, ensuring your estate assets reach the right people is equally important. Coordinating your will with your NHS pension nominations provides comprehensive protection for your family.

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Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.