The NHS pension is auto enrolment, not salary sacrifice: eligible staff are enrolled automatically, and contributions come out of pay before tax.

Two different things get mixed up here: how you end up in the scheme, and how your contribution leaves your pay. For the NHS pension the first is automatic enrolment and the second is a deduction from gross pay, not a salary sacrifice. Where the NHS scheme fits among your other pensions and savings is a wider question. An FCA-authorised adviser can work it through with you by telephone, without charge: add your details to the form on this page.

Is the NHS pension auto enrolment?

Yes. The NHS Business Services Authority (NHSBSA) calls the NHS Pension Scheme "the default pension scheme for NHS workers to be automatically enrolled in under government efforts to increase levels of personal pension saving in the UK." Its 2015 Members Guide (V13, May 2024) goes on: "Membership of this Scheme is voluntary but if you are eligible you will be automatically enrolled and made a member from the day you start or restart in the NHS, unless you decide to opt out after joining."

There are two exceptions in the same passage. Freelance locum medical practitioners are excluded from automatic enrolment and "need to opt to join the Scheme". And anyone who is not eligible to be automatically enrolled is put into "an Alternative Qualifying Pension Scheme" by the employer instead. For the NHS scheme, enrolment can happen from the employer's staging date, a re-enrolment date or the date you become an eligible worker. Who counts as eligible for the NHS scheme itself is set out in who can join the NHS pension.

That guide is written for the 2015 Scheme in England and Wales, and so is this page. NHS staff in Scotland and Northern Ireland belong to separate NHS schemes, so check how the Scottish scheme differs if you work in Scotland. How automatic enrolment works for workplace pensions generally is in the workplace pension rules guide.

Is the NHS pension compulsory?

No: you can leave. In NHSBSA's words, "You can opt out of this Scheme at any time but you may be automatically re-enrolled by your employer every three years under the auto enrolment process." Leaving has to be your own choice. The opt-out form (SD502) tells members plainly that their employer cannot ask or force them to opt out, and that anyone who is pushed can tell the Pensions Regulator. GOV.UK's workplace pension guidance likewise says an employer cannot encourage you to opt out.

So opting out may not be permanent. The steps, the form and how re-enrolment works are in how to opt out of the NHS pension, and whether leaving makes sense for you is weighed up in is the NHS pension worth it.

Is NHS pension salary sacrifice? How the money leaves your pay

No. NHSBSA's employer guidance on pay and contributions is explicit: "Member contributions to either the main NHS Pension Scheme or the NHS Money Purchase Pension Scheme cannot be paid by salary sacrifice." Instead, the SD502 form says contributions "are deducted before tax", and the 2015 Members Guide says the same, so you get tax relief on whatever you pay in.

A deduction like that matches what HMRC's Pensions Tax Manual describes as a net pay arrangement: the employer takes the contribution from gross pay in the tax year it is made, then operates PAYE on the remainder, which gives full relief at the member's marginal rate. Salary sacrifice is a different mechanism. GOV.UK describes it as something you and your employer may agree, where you forgo part of your salary in return for the employer paying that amount into your pension; in some cases, it adds, both sides then pay less tax and National Insurance.

For a side-by-side of the methods, net pay, relief at source and salary sacrifice compared sets out all three, and NHS pension tax relief covers what relief an NHS member actually gets. Whether sacrifice is worth having in a pension that allows it is discussed in is pension salary sacrifice worth it.

Where salary sacrifice does touch an NHS pension

A salary sacrifice for something else can still hit your pension. The 2015 Members Guide warns that "entering into or continuing with any salary sacrifice arrangement (e.g. Childcare Vouchers, Lease Car Schemes etc.) that reduces your gross pensionable earnings will have a negative effect on the amount of pension you are able to build up in that year." It adds that "the overall effect from participating in any salary sacrifice scheme would be to reduce the amount of final benefits you build."

Which of these perks your own employer offers, and how each would cut your pensionable pay, is a question for payroll or HR. If you are deciding whether a lease car or similar perk is worth a smaller pension build-up, request a call-back; an adviser will go over both with you, free of charge.

What the contribution tiers mean for your pay

You pay a percentage of pensionable pay, and NHSBSA's guide says "the more you earn, the higher your contribution rate may be", adding that "There are several rates of member contribution". Automatic enrolment decides that you are in the scheme; your pay decides the rate. The current tier table, and how part-time pay is treated, is on NHS pension contribution rates.

Your payroll team can say which tier you are in today. If you joined before 2015 and are unsure which section holds your benefits, see which NHS pension scheme am I in.

NHS pension, auto enrolment and salary sacrifice: common questions

What is the difference between auto enrolment and salary sacrifice?

Auto enrolment is the duty to put eligible workers into a pension unless they opt out. Salary sacrifice is a separate agreement to give up pay for a payment into the pension. A scheme can have the first without the second, and the NHS scheme does.

Is an auto enrolment pension always salary sacrifice?

No. GOV.UK treats salary sacrifice as an optional agreement between you and your employer, on top of enrolment. The NHS scheme is one example: its contributions are simply deducted before tax. The comparison guide explains net pay and relief at source.

Is there an NHS pensions salary sacrifice factsheet?

The 2015 Members Guide has its own short section on the impact of salary sacrifice, quoted above, and points members to NHSBSA's website for more. The rule on member contributions sits in NHSBSA's employer guidance on pay and contributions.

Does my NHS employer pay in as well?

Yes. The members guide says the cost of the scheme "is shared between members and employers", with employers paying the rest after the member's contribution. The amounts are set out in how much the NHS pays into your pension.

Does this apply if I work in Scotland?

Not directly. Everything quoted here comes from the scheme for England and Wales, and Scotland's NHS scheme has its own rules, so start with the Scottish guide.

Your next step

Your own mix of NHS service, other pensions and State Pension is where a personal conversation helps. NHSBSA and MoneyHelper give free information, and filling in the short enquiry form here brings a call, at no cost to you, from an FCA-authorised adviser able to look across all of it.

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