NHS Pension

GunJack

MFW2026 said:

Hi, can I ask if this is still true in regards to NHS pensions 

In HMRC's eyes, the value of the NHS “pension pot” is equal to 20 times the annual defined benefit of your pension. So for example, if you are due to receive £40,000 per year in pension as your defined benefit, HMRC sees this as a ‘pot’ of £800k. ? 

Thanks 

plus any automatic lump sum, so in your example, if there was an automatic LS of £50k, HMRC would treat it as £850k.

HappyHarry

MFW2026 said:

Hi, can I ask if this is still true in regards to NHS pensions 

In HMRC's eyes, the value of the NHS “pension pot” is equal to 20 times the annual defined benefit of your pension. So for example, if you are due to receive £40,000 per year in pension as your defined benefit, HMRC sees this as a ‘pot’ of £800k. ? 

Thanks 

For lifetime allowance purposes, the NHS pension uses 20 times the annual pension plus the value of any lump sum. 

e.g. a £20,000 NHS pension with a £60,000 lump sum would use up £460,000 of the lifetime allowance, which is 42.87% of the current lifetime allowance of £1,073,100.

There is no pot value, and HMRC does not see it as such.

Flugelhorn

MFW2026 said:

Hi, can I ask if this is still true in regards to NHS pensions 

In HMRC's eyes, the value of the NHS “pension pot” is equal to 20 times the annual defined benefit of your pension. So for example, if you are due to receive £40,000 per year in pension as your defined benefit, HMRC sees this as a ‘pot’ of £800k. ? 

Thanks 

Mine was 1995 and the "pot" for LTA purposes was 20 times the pension + the lump sum - so approx 23x the pension - I think for later iterations of the NHS pension in it is indeed 20x

hyubh

Flugelhorn said:

MFW2026 said:

Hi, can I ask if this is still true in regards to NHS pensions 

In HMRC's eyes, the value of the NHS “pension pot” is equal to 20 times the annual defined benefit of your pension. So for example, if you are due to receive £40,000 per year in pension as your defined benefit, HMRC sees this as a ‘pot’ of £800k. ? 

Thanks 

Mine was 1995 and the "pot" for LTA purposes was 20 times the pension + the lump sum - so approx 23x the pension - I think for later iterations of the NHS pension in it is indeed 20x

It's not NHS specific, it's the LTA calculation for DB pensions in general.

hugheskevi

MFW2026 said:

In HMRC's eyes, the value of the NHS “pension pot” is equal to 20 times the annual defined benefit of your pension. So for example, if you are due to receive £40,000 per year in pension as your defined benefit, HMRC sees this as a ‘pot’ of £800k. ?

May be relevant to note that the Lifetime Allowance calculation is done when you crystallise the pension. This is usually when you start to receive the pension and the calculation is based on the pension and lump sum which is put into payment.

Figures provided by the administrator prior to retirement will usually be based on pension and lump sum due at Normal Pension age, so if you were to commence pension prior to Normal Pension age with actuarial reduction, the Lifetime Allowance usage would be lower than taking the unreduced pension at Normal Pension age.

And for completeness, when valuing benefits for the Annual Allowance and calculation of Pension Input Amounts, the multiplier is 16 rather than the factor 20 used for Lifetime Allowance calculation.

Flugelhorn

hyubh said:

Flugelhorn said:

MFW2026 said:

Hi, can I ask if this is still true in regards to NHS pensions 

In HMRC's eyes, the value of the NHS “pension pot” is equal to 20 times the annual defined benefit of your pension. So for example, if you are due to receive £40,000 per year in pension as your defined benefit, HMRC sees this as a ‘pot’ of £800k. ? 

Thanks 

Mine was 1995 and the "pot" for LTA purposes was 20 times the pension + the lump sum - so approx 23x the pension - I think for later iterations of the NHS pension in it is indeed 20x

It's not NHS specific, it's the LTA calculation for DB pensions in general.

the OP was asking about the NHS pension

hyubh

Flugelhorn said:

hyubh said:

Flugelhorn said:

MFW2026 said:

Hi, can I ask if this is still true in regards to NHS pensions 

In HMRC's eyes, the value of the NHS “pension pot” is equal to 20 times the annual defined benefit of your pension. So for example, if you are due to receive £40,000 per year in pension as your defined benefit, HMRC sees this as a ‘pot’ of £800k. ? 

Thanks 

Mine was 1995 and the "pot" for LTA purposes was 20 times the pension + the lump sum - so approx 23x the pension - I think for later iterations of the NHS pension in it is indeed 20x

It's not NHS specific, it's the LTA calculation for DB pensions in general.

the OP was asking about the NHS pension

Indeed, so there's no difference here between the 1995, 2008 and 2015 sections in principle, because it isn't NHS scheme specific in the first place...