Can I Transfer an NHS Pension to SIPP?
Around 1.2 million people work for the NHS in England, making it one of the world’s largest employers. Employees benefit from a defined benefit pension scheme, which pays a guaranteed income based on salary and the number of years’ service.
Under the Pension Schemes Act 2015, transferring NHS pension benefits to a defined contribution scheme such a SIPP, personal pension or most workplace schemes is not possible.
The exception to this is if you have less than two calendar years of scheme membership. Then, you may be able to transfer your NHS pension to a SIPP. Where this is the case, the scheme administrators will work out a transfer value based on the pension rights you have accrued.
Defined benefit schemes guarantee a future income. As this is a valuable pension benefit, we recommend seeking advice if you have less than two years’ membership. Other options may be available. For example, if you move to another employer with a registered defined benefit scheme, you may be able to transfer your NHS pension into its scheme.
Can I top up my NHS pension with a SIPP?
Yes, there is nothing to stop you having a SIPP alongside your NHS pension. This allows you to take advantage of tax relief on any contributions you make while also giving you greater flexibility around how you take an income in retirement.
If you do this, you will need to be mindful of the annual and lifetime allowances as these apply across all your pensions, including your NHS pension.
Annual allowance
You can contribute the lower of £60,000 or 100% of your annual earnings each year and receive tax relief on your personal contributions. This allowance includes your own contributions but also any employer contributions and tax relief.
As well as keeping tabs on what you pay into your SIPP, you will also need to work out what has been paid into your NHS pension – known as the pension input amount. This is the difference between the opening value of your pension at the start of the tax year and its closing value at the end of the tax year.
Details of the calculation required to determine this figure can be found on the HMRC website.
Can I transfer other pensions into a SIPP?
Opening a SIPP could also be useful if you are looking to consolidate older pensions, perhaps from former employers or personal pensions you set up yourself.
Bringing older pension schemes together in a SIPP makes it easier to see what you have saved for retirement. It also means you can take advantage of the wide range of investment options available on a SIPP across more of your pension savings.
Transferring older pension into a SIPP is easy, with your SIPP provider managing the process on your behalf.
As a pension transfer is irreversible, we do recommend seeking financial advice if you are considering consolidating older pensions. Some pensions have generous benefits so it is important to understand the implications of moving them.
How can Pension Wise help?
If you have a defined contribution pension scheme and are 50 or over, then you can access free, impartial guidance on your pension options by booking a face to face or telephone appointment with Pension Wise, a service from MoneyHelper.
If you are under 50, you can still access free, impartial help and information about your pensions from MoneyHelper.
Learn more about our SIPP
Learn how to make the most out of your SIPP with our useful guides.
Please remember, SIPPs are aimed at people happy to make their own investment decisions. Investment value can go up or down and you could get back less than you invest. You can normally only access the money from age 55 (57 from 2028). We recommend seeking advice from a suitably qualified financial advisor before making any decisions. Pension and tax rules depend on your circumstances and may change in future.