Sadly – many nurses can’t afford their “gold-plated” pensions.

“The Government can get people back to work – and also reduce taxpayer costs – by allowing all public sector workers to choose higher pay today, in exchange for a lower DB pension in retirement” – John Ralfe

This is not a daft idea, it deserves attention and in the absence of better, will get it.

The NHS Pension Scheme employer contribution rate increased on 1 April 2019 from 14.3% to 20.6%, ( plus the employer levy of 0.08%).

If a nurse could “flex” pension for pay, employers could afford to pay more salary (but remember salary requires employers to pay National Insurance while pension contributions don’t- so it’s not quite one for one).

So if you agree with the Government that nurses aren’t fundamentally underpaid, then a pension flex makes sense.

If your view is that NHS pensions aren’t “gold-plated” but a way to allow people to retire in dignity with retirement, you will baulk at the opportunity to flex.

If you are a nurse, you pay a sliding scale of pension contributions, reducing as a percentage of your pay the less you earn


For nurses who earn under the lower earning limit for income tax, there is no tax incentive (though this will change in 2025 so that all nurses get either the tax relief or the equivalent tax-incentive). So giving up pension might also mean more take home.

Once employee contributions reduce below 4% (of band earnings) , members are no longer auto-enrolled , this is a further complication.

A pension scheme many nurses can’t afford.

It is right that people understand the total pay (reward) is the amount to compare nurses NHS pay (compared with private sector pay).

But this dispute is not about nurses leaving to the private sector, it is about how we value nurses.

“Gold Plated” is not the lifestyle I see among retired nurses I know . It would be interesting to know what the average retirement income of a former NHS nurse is today but certainly nurses should be a lot better off for being in the pension scheme.

If you’d been listening to radio 5 this morning at 2.25  you could have heard a 78 year old widower explaining he would not see his 64 year old son who recently died – cremated. He did not have any means to pay for a cremation ceremony. There are costs for not being in a pension.

All NHS employees enjoy a CARE scheme, which entitles them to 1/54th of each year’s earnings, which means that taken together with state pension (some of which is paid out of the NHS scheme) nurses could retire on an equivalent standard of living as a pensioner to when they were at work.

But figures from the NHS Business Services Authority (NHSBSA) show that between April and July this year, 66,167 NHS staff in England and Wales opted out of their NHS pensions, more than double the 30,270 who removed themselves from the pension scheme during the same period last year.

The Nursing Times reports that  4,378 registered nurses stopped paying into their NHS pensions between April and July this year and, in total, 11,937 nurses have opted out since April last year.

The sad truth is that for many nurses , the NHS pension is just too expensive. gold-plated or not.

According to Nursing Times, a newly qualified nurse in England and Wales on a salary of around £27,000 would pay around £183 of their basic salary into their pension each month.

Using the Minimum Income Standard (MIS), which is used to calculate the UK real living wage, the New Economics Foundation found in October  that the income of a single newly-registered Band 5 nurse with two children, would be between £1,450 and £1,750 below the MIS

This looks like a design issue supporting the argument of a pension flex. Many nurses already qualified for the pay-rise suggested but for all the wrong reasons.

Has the argument been made that the NHS pension scheme is already a lot less expensive for so many staff leaving it?

Unfortunately, I suspect that the deferred windfall to the tax-payer resulting from these opt-outs will not count for much at the Treasury which is looking at immediate costs. The pension costs from retiring nurses are unlikely to be counted in HMT calculations.

And this may be why putting pensions on the bargaining counter , hasn’t happened yet.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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4 Responses to Sadly – many nurses can’t afford their “gold-plated” pensions.

  1. Allan Martin says:

    In the annals of pension’s history, John’s pensions investment and risk challenges are legendary. On nurses deferred pay, I’m more than sympathetic, not just for those nurses finishing a night shift as I write. I however fear there is a bigger problem – the unsustainability and massive intergenerational transfer* of liabilities for all unfunded public sector pensions – the NHS, teachers, police, fire, armed services and civil servants. (That is over 5m voters.)

    On 30th March 2023, H M Treasury decided to promise these benefits using a lower discount rate in the calculation. The SCAPE discount rate is the least appreciated actuarial assumption in the country. The new rate, CPI+1.7%**, effective from April 2024, will add £8bn pa to employer contributions each year (department budgets will be fudged.). The alternative extra employee contributions, lower benefits, later retirement or just under 0.5p on income tax wasn’t adopted.

    *Our children and grandchildren will pick up the tab (if they don’t emigrate.)

    ** This reflects expected growth in GDP, shame about the £2tn of benefits already promised on average at CPI+3%, a “lifetime pensions lock” totally unappreciated by too many.

  2. jnamdoc says:

    I’m not sure “legendary” is the word.

    Another example of bonkers actuarial assumptions finding a way to scare people out of their wage in retirement.

    And by the way with 40 years’ nursing service, lifting, cleaning, terrible shifts, etc do not think most nursing / caring staff will be spending their retirement playing golf or doing yoga. It is a very physically demanding and damaging job / vocation.

    We know, quite frankly, that the actuarial profession can produce any set of numbers they want, to back fill the brief (from Govt). If we want to price nurses out of their pensions, job done! Insult upon injury, having forced them to fund their teaching qualifications by turning that into a self-funding degree (while they work!).

    We need sensible and balanced investment return assumptions.

    Let’s do some simple maths – so, the contribution rate for an average wage nurse (say £35,000) would be 20.6% (emp’er) + 90.% (emp’ee) = 29.9%.

    £35k X 29.9% X 40 years (from ages 30 to 70, the likely future etirement age) = 12 X their pay. Even if that only held parity with inflation (investing in ILGs ,say), that amounts to 12 X their annual pay. Now – and all think about this – if any one of us was to be given a pension pot of 12X closing annual pay, then even if that was spread over 20 years (to age 90!), that would represent a replacement pension of 60% (before State pension). I think we’d all be happy with that?

    And, if we took the “heroic” assumption that investment managers could actually do their job and beat inflation by say only 0.5% p.a., that would deliver a replacement pension of c75%.

    The profession has made this all so complicated, and so much so that they all get to mark their own homework.

    The beneficiaries of this approach are Gov’t who get to avoid paying the deferred wages they promised people when they enticed people into the profession (and by the way, presenting it as the nurses “own choice”) and the investment managers who set themselves wonderfully low (can’t fail) investment targets. Come on?

    Its as scandal. Let’s not allow this to be presented as doing the nurses a favour.


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