Public Sector & Occupational Pensions UKNHS Pension Added Years and Additional Contributions — Is It Worth It?
Guide to boosting your NHS pension with added years, Additional Pension, and ERRBO. How each scheme works, costs, and whether it's worth buying extra pension.
The NHS Pension Scheme is one of the best workplace pensions available. But if you have gaps in service, work part-time, or want to retire early, you may want to boost it. Here are your options.
NHS Pension Scheme Overview
| Feature | 2015 Scheme (current) | 1995/2008 Section (legacy) |
|---|
| Type | Defined benefit (guaranteed income) | Defined benefit |
| Accrual rate | 1/54th of pensionable pay per year | 1/80th (1995) or 1/60th (2008) |
| Revaluation | CPI + 1.5% per year | Based on final salary |
| Normal Pension Age | State Pension age (currently 67) | 60 (1995) or 65 (2008) |
| Lump sum | No automatic lump sum — can commute pension | 3× annual pension (1995 only) |
| Employer contribution | ~23.7% of pensionable pay | ~23.7% |
| Employee contribution | 5.1%–14.5% (tiered based on salary) | Same |
Related: NHS Staff Discounts and Benefits
Option 1: Additional Pension (2015 Scheme)
This is the main way to boost your NHS pension if you are in the 2015 scheme.
| Detail | Information |
|---|
| What it buys | Extra guaranteed pension on top of your normal accrual |
| Maximum purchase | £7,352 of extra annual pension per year (2026/27 limit) |
| How it works | You pay a lump sum or regular deductions from salary |
| Tax relief | Yes — contributions come from pre-tax salary |
| Inflation-linked? | Yes — the additional pension increases with CPI in retirement |
| Guaranteed? | Yes — defined benefit, not subject to investment risk |
The cost depends on your age when you start — the younger you are, the cheaper it is.
| Age at purchase | Approximate cost for £1,000/year extra pension |
|---|
| 25 | ~£7,500 |
| 30 | ~£8,500 |
| 35 | ~£10,000 |
| 40 | ~£12,000 |
| 45 | ~£14,500 |
| 50 | ~£17,500 |
| 55 | ~£21,000 |
These are illustrative — exact costs from NHS Pensions.
Is Additional Pension Worth It?
| Factor | Analysis |
|---|
| Break-even point | Typically 12–18 years of receiving the extra pension |
| Average retirement length | 20–25+ years |
| Tax relief on contributions | Effectively reduces cost by 20%–45% depending on your tax band |
| Inflation protection | Additional pension rises with CPI — protects against inflation |
| Compared to saving privately | Very hard to match with a private pension or ISA — guaranteed and inflation-linked |
| Verdict | Excellent value for most people — especially younger members |
How to Apply
| Step | Action |
|---|
| 1 | Contact NHS Pensions (nhsbsa.nhs.uk/nhs-pensions) or your employer’s HR/pensions team |
| 2 | Request a quote for the amount of additional pension you want |
| 3 | Choose lump sum or regular contributions |
| 4 | Contributions are deducted from salary (pre-tax) |
Option 2: ERRBO (Early Retirement Reduction Buy Out)
If you want to retire before your Normal Pension Age (67 for most 2015 scheme members), your pension is reduced. ERRBO removes this reduction.
| Detail | Information |
|---|
| What it does | Removes the early retirement reduction for a specific earliest retirement age |
| Normal Pension Age | State Pension age (currently 67 for most) |
| Without ERRBO — retiring 5 years early | ~25% pension reduction |
| Without ERRBO — retiring 3 years early | ~15% pension reduction |
| With ERRBO | You choose your target retirement age — ERRBO removes the reduction |
| How you pay | Regular payroll deductions (pre-tax) |
| Available? | Only if your employer offers it — not all NHS trusts do |
ERRBO Worked Example
| Detail | Without ERRBO | With ERRBO |
|---|
| Annual pension at age 67 | £20,000 | £20,000 |
| Retiring at 62 (5 years early) | £15,000 (25% reduction) | £20,000 (no reduction) |
| Difference per year | -£5,000 | — |
| Over 20 years of retirement | Loss of £100,000 | £0 loss |
| Cost of ERRBO | N/A | Monthly payroll deductions over working life |
Important: ERRBO is employer-funded in terms of administration. Not all NHS trusts offer it. Ask your employer’s HR or pensions team.
Option 3: Added Years (Closed Scheme)
| Detail | Information |
|---|
| Status | Closed to new applicants since March 2008 |
| Who can still use it | Members who already had an Added Years contract before 2008 |
| What it does | Buys additional years of pensionable service |
| How it works | Regular salary deductions |
| If you have an existing contract | Keep paying — it’s likely excellent value |
If you have an existing Added Years contract, do not cancel it without taking specialist advice. These contracts are typically very good value and cannot be restarted once stopped.
Option 4: AVCs (Additional Voluntary Contributions)
| Detail | Information |
|---|
| What | A separate savings pot alongside your NHS pension |
| Type | Defined contribution (money-purchase) — not guaranteed |
| Provider | Usually Prudential (for NHS Shared Cost AVCs) |
| Tax relief | Yes — deducted from pre-tax salary |
| At retirement | Can take 25% tax-free, use rest for income or annuity |
| Flexibility | More flexible than Additional Pension — can choose investments |
| Risk | Investment risk — value depends on market performance |
Shared Cost AVCs
Some NHS employers offer Shared Cost AVCs where the employer also contributes. This is done through salary sacrifice, reducing your NI contributions too.
| Feature | Standard AVC | Shared Cost AVC |
|---|
| Your cost | Full contribution from salary | Salary sacrifice — saves NI too |
| Employer cost | Nothing | Contributes via salary sacrifice arrangement |
| NI saving? | No | Yes — both employer and employee |
| Available? | Yes | Only if your employer offers it |
Comparison — Which Option Is Best?
| Option | Best for | Risk | Cost | Guaranteed? |
|---|
| Additional Pension | Boosting pension with certainty | None — guaranteed | Fixed (age-dependent) | Yes |
| ERRBO | Retiring before 67 without penalty | None — guaranteed | Fixed ongoing deductions | Yes |
| AVCs | Flexibility, lump sum at retirement | Investment risk | Variable | No |
| Added Years | Existing contracts only | None — guaranteed | Fixed | Yes |
For most people: Additional Pension is the best option if you want guaranteed extra income. ERRBO is essential if you plan to retire early. AVCs offer flexibility but come with investment risk.
Tax Considerations
| Point | Detail |
|---|
| Contributions reduce taxable income | All options are pre-tax — saves 20%–45% depending on your tax band |
| Annual Allowance | Total pension contributions (including employer) must stay within the £60,000 Annual Allowance to avoid a tax charge |
| NHS staff affected by AA | Higher earners (consultant-level) may breach the Annual Allowance — check your annual pension statement |
| Carry forward | Unused Annual Allowance from the previous 3 years can be carried forward |
Related: Pension Annual Allowance Carry Forward | How Pension Tax Relief Works
| Situation | Recommended action |
|---|
| Part-time worker with lower accrual | Additional Pension to top up |
| Career break reduced your pension | Additional Pension to fill the gap |
| Planning to retire before 67 | ERRBO to remove early retirement penalty |
| Higher earner wanting flexibility | Shared Cost AVCs for NI savings and lump sum |
| Close to retirement with a shortfall | Additional Pension — but check costs as they’re higher for older purchasers |
Action Checklist
| Action | Done? |
|---|
| Log in to NHS Pensions (nhsbsa.nhs.uk/member-hub) and check your Total Reward Statement | ☐ |
| Calculate your projected pension at NPA and at your target retirement age | ☐ |
| Ask your employer if ERRBO is available | ☐ |
| Request an Additional Pension quote | ☐ |
| Check whether your employer offers Shared Cost AVCs | ☐ |
| Review your Annual Allowance position (especially if earning £50,000+) | ☐ |
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