ii SIPP
Can I Transfer an NHS Pension to SIPP?
Around 1.5 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.
The NHS Pension Scheme is a defined benefit (DB) pension, which provides a guaranteed income in retirement based on your salary and length of service.
In most cases, you cannot transfer NHS pension benefits into a defined contribution (DC) arrangement such as a SIPP, personal pension, or workplace pension. This is because the NHS Pension is an unfunded public service pension scheme, and legislation prevents transfers of these valuable DB benefits into DC schemes.
There is a limited exception if you leave the scheme with less than two years’ qualifying membership. In this case, depending on the scheme rules, you may be offered either:
- a refund of your own contributions (less tax), or
- the option to transfer a cash equivalent value of your pension rights to another scheme, which could include a SIPP.
Because defined benefit pensions like the NHS scheme promise a secure income for life, they are usually very valuable. If you are considering transferring benefits with under two years of membership, or if you are offered alternative options, it’s important to seek professional financial advice before making a decision.
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 allowance as it applies across all your pensions, including your NHS pension.
Annual allowance
You can contribute up to the lower of £60,000 or 100% of your relevant UK earnings each tax year and receive tax relief on your personal contributions. Employer contributions are not limited by your earnings but do count towards the £60,000 annual allowance. This allowance covers all contributions — your own, your employer’s, and the basic-rate tax relief added by your provider.
For the NHS Pension Scheme, it’s not the cash contributions that count but the pension input amount — the increase in the value of your promised pension over the year, as calculated under HMRC rules. Your scheme administrator will normally provide you with this figure if you need it, and further details of the calculation 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 a 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.
Important information: The ii SIPP is for people who want to make their own decisions when investing for retirement. As investment values can go down as well as up, you may end up with a retirement fund that’s worth less than what you invested. Usually, you won’t be able to withdraw your money until age 55 (57 from 2028). Before transferring your pension, check if you’ll be charged any exit fees and make sure you don't lose any valuable benefits such as guaranteed annuity rates, lower protected pension age or matching employer contributions. If you’re unsure about opening a SIPP or transferring your pension(s), please speak to an authorised financial adviser.