NHS Pension vs SIPP: How the Two Compare

What this compares

This guide sets out the factual differences between two ways of providing for retirement as a doctor: staying in the NHS 2015 CARE pension, or holding the equivalent contributions in a self-invested personal pension (SIPP).

The scope is the 2015 CARE scheme only. The legacy 1995 and 2008 sections are closed to future accrual, so they are not part of this comparison — though many doctors have preserved benefits in them from earlier service.

Everything here, and in the NHS Pension vs SIPP calculator, is expressed in real terms — today's money. The SIPP return you enter is a real return (after inflation), and the NHS scheme's revaluation is applied in real terms, so inflation nets out on both sides.

This is information, not financial advice. It does not tell you whether to stay in the scheme or opt out. Opting out of the NHS Pension Scheme is a significant, hard-to-reverse decision, and it is one for which regulated financial advice is strongly recommended. See where to get advice.

Two different kinds of pension

The two are structurally different products, which is why they cannot be compared on a single number.

The NHS 2015 pension is a defined benefit. You accrue a guaranteed income, expressed in £/year, regardless of what financial markets do. The scheme carries the investment risk and the longevity risk. The pension is paid for the rest of your life and rises each year with inflation.

A SIPP is a defined contribution pot. It is worth what you and any employer pay in, plus or minus the investment return actually achieved, minus charges. You carry the investment risk and the longevity risk: the pot can grow or fall, and it has to be made to last however long you live.

Because of this, the calculator converts the SIPP pot into a "comparable income" using a drawdown rate you choose, purely so the two can be shown side by side. That conversion is an illustration, not a guaranteed income.

How the NHS pension builds up

The 2015 scheme is a career average revalued earnings (CARE) scheme. Each year works like this:

• You build a pension worth 1/54th of that year's pensionable pay (an accrual rate of 1/54).
• Each slice built up is then revalued every year until retirement. For active members the revaluation is CPI + 1.5% — modelled here as +1.5% in real terms, because CPI nets out once everything is in today's money.

So a doctor with £70,000 of pensionable pay builds roughly £1,296 of pension (£70,000 ÷ 54) in that year, and each such slice grows at 1.5% real until it is drawn. Add up every year's revalued slice and you have the guaranteed annual pension at retirement.

For GPs, pensionable pay is the aggregated pensionable income across all posts — there is no whole-time-equivalent concept, unlike hospital doctors.

How a SIPP builds up

A SIPP builds up by compounding:

• Each year, a contribution is paid in.
• The pot grows at the investment return achieved (net of charges).
• At retirement, the accumulated pot can be drawn down.

There is no revaluation guarantee and no promised income. A widely used long-run planning figure for a diversified global-equity portfolio is around 5% real; a more conservative 60/40 mix is often modelled nearer 3–4% real. These are assumptions, not entitlements — the actual return is unknown in advance and can be negative over long periods.

The calculator turns the final pot into a comparable income using a drawdown rate (3.5% of the pot per year is a commonly used sustainable-withdrawal planning figure). A higher drawdown rate shows more income but depletes the pot faster.

The employer contribution: the decisive mechanical difference

This is the single factor that most changes the comparison, and it is a matter of mechanics, not opinion. It is also widely misunderstood, so it is worth being precise.

The headline employer rate is 23.7%, but that is not what the employer pays. For GP practices and other primary-care employers, NHSBSA collects only 14.38% (14.3% plus the 0.08% scheme administration levy). The remaining 9.4% is paid directly by NHS England as central funding and never passes through the employer at all. Because that 9.4% is never in anyone's pocket but the scheme's, it is not something you could ever redirect by opting out. Only the 14.38% actually paid on your behalf is even potentially capturable.

And whether even that 14.38% is capturable depends entirely on your working arrangement. This is the nuance the calculator now models, with an editable "employer contribution you could redirect" figure:

• Salaried GP. The employer keeps its contribution if you opt out. Nothing is redirectable, so a SIPP is funded from your own contribution only.
• Locum GP. The practice will often pay the employer contribution because it is ring-fenced for the NHS pension, but may not pay the equivalent as higher session fees. So the realistic redirect depends on what you could actually negotiate — the calculator defaults to 0%, and you can raise it if your fees would genuinely absorb it.
• GP partner. Opting out reduces the practice's employer-contribution outgoing, and that saving flows back to the partner as higher profit share. So the 14.38% is, in principle, recoverable — though partnership agreements handle superannuation differently, which is why the figure is editable rather than fixed.

The effect on the comparison is large. On £70,000 of pay the member contribution is £8,750 (12.5%). A partner who recovers the full 14.38% adds £10,066, investing £18,816 a year; a locum or salaried GP invests the £8,750 alone. The more of the employer contribution that is genuinely capturable, the closer the SIPP side can get — and for most people that is far less than the headline 23.7% would suggest.

These figures are the calculator's assumptions, not a statement about your own practice. If you are a partner, check how your partnership agreement treats employer superannuation before assuming you would recover it.

Member contribution tiers

Member contributions are tiered by pensionable pay. The system is a slab, not a marginal one: your whole pensionable pay is charged at the single rate its total falls into.

Contribution tiers for 2025/26 (carried into 2026/27), England & Wales:

Because it is a slab system, a pay rise that crosses a threshold lifts the rate on your entire pensionable pay, not just the amount above the threshold. Pay sitting just below a threshold is worth being aware of for that reason. These are the member rates only; the employer contribution (14.38% actually paid, plus the centrally-funded balance up to the 23.7% headline rate) is charged on top at every tier.

The break-even return

The calculator reports a break-even return: the real (after-inflation) investment return a SIPP would need to achieve for its drawdown income to match the NHS scheme's guaranteed pension.

It is solved on a discrete grid of returns from 1% to 11% in ½% steps, and reports the first grid rate at which the SIPP income reaches the NHS figure. If no rate up to 11% reaches it, the tool shows ">11%".

Two facts are important when reading it:

1. It compares income only. It does not attempt to price the NHS scheme's guarantee, its inflation-proofing, or the insurance benefits (death and survivor cover) built into it. Reaching the break-even return means matching the income, not replicating the whole package.
2. The return is not guaranteed. A SIPP that needs, say, a 4.5% real return to break even may achieve more or less than that; the NHS figure is fixed regardless.

Death-in-service benefits

The 2015 scheme pays a lump-sum death-in-service benefit if you die while an active member. The calculator presents this as a range, because the figure can be expressed on more than one basis:

• 2 × relevant pensionable earnings, and
• 2.025 × the prospective annual pension you would have built up.

The scheme applies its own rules to determine the actual figure, so the tool shows the span between these two bases (for example, roughly £78,915–£140,000 on the default scenario) rather than a single number. Confirm your own death-in-service figure with NHS Pensions or an IFA.

A SIPP has no death-in-service multiple. On death, the beneficiary receives the pot built up so far — which, early in a career, is small or nil. That is why the calculator's age-by-age crossover shows the NHS benefit ahead when you are young (a fixed multiple, payable from day one) and the SIPP potentially ahead only later, once the pot has had decades to grow.

The survivor's pension

The 2015 scheme pays an adult survivor's pension of 33.75% of the member's pension, for the survivor's lifetime.

The calculator also shows an illustrative undiscounted lifetime value to age 90. A younger partner draws the survivor's pension for longer, so the illustrated value is higher — hence the tool asks for partner age. This figure is undiscounted and illustrative; it is not a quotation.

A SIPP again has no equivalent guarantee: a surviving partner inherits any remaining pot, which may be more or less than a lifetime survivor's pension depending on investment performance, how much has already been drawn, and how long the survivor lives.

How the tax treatment differs

Both are pensions and share the broad pension tax framework, but several details differ. These are factual points, each of which can change with your circumstances:

• Income tax in retirement. NHS pension income is taxable as income. SIPP drawdown income is likewise taxable, though a SIPP normally allows up to 25% of the pot as a tax-free lump sum (subject to the lump sum allowance). The NHS scheme allows a tax-free lump sum too, by commuting pension to cash at a fixed rate.
• The annual allowance. Pension growth in both counts towards your annual allowance. NHS "pension input" is measured by the growth in your promised pension, not the contributions paid — which can be large in a good pay-rise year. SIPP input is simply the contributions.
• Normal minimum pension age. The earliest age a SIPP (and most pensions) can normally be accessed rises from 55 to 57 on 6 April 2028.
• Inheritance tax. From April 2027, unused pension pots are due to fall within the scope of inheritance tax. This affects the death-benefit position of a SIPP pot. Confirm your own position, as the rules are still being finalised.

None of these points is a recommendation; each is a fact to check against your own situation and current HMRC rules.

What the comparison captures — and what it doesn't

The calculator does the arithmetic on the assumptions you enter. It is deliberately neutral: it produces numbers and does not pick a winner.

It captures: the guaranteed NHS pension; the projected SIPP pot and a comparable drawdown income; the break-even return; the death-in-service range; the age-by-age death-benefit crossover; and the survivor's pension.

It does not capture: the value of the NHS guarantee and inflation-proofing beyond the income figure; SIPP charges beyond your net-of-fees return assumption; tax on income or lump sums in your specific bands; annual-allowance charges; ill-health retirement protection; your personal attitude to investment risk; or the legacy 1995/2008 sections. It is England & Wales only — Scotland (SPPA) and Northern Ireland (HSC) have their own arrangements.

A number matching does not mean the two options are equivalent. A guaranteed, inflation-linked, longevity-insured income and a flexible, inheritable, market-exposed pot are different things, and the calculator does not weigh one against the other for you.

Where to get advice

This guide and the calculator are general information, not personal financial advice, and not a recommendation to stay in the NHS scheme or to opt out.

Opting out of the NHS Pension Scheme means giving up the employer contribution, the guaranteed pension, and the death and survivor benefits described above. It is a regulated financial-advice decision. If you are weighing it up:

• Speak to an independent financial adviser, ideally one experienced with NHS pensions. The scheme's benefits are unusual and generalist advice can miss their value.
• Get your own figures from NHS Pensions / NHSBSA — including a Total Reward Statement or Annual Benefit Statement, and a personal death-in-service figure.
• MoneyHelper (the government's free service) offers impartial guidance on pensions.

Sources for the figures in this guide: NHSBSA contribution rates and 2015 scheme rules for 2025/26; the employer contribution of 23.7% (of which 14.38% is paid by employers and the balance funded centrally by NHS England, per NHSBSA); and scheme constants of 1/54 accrual, CPI + 1.5% revaluation, and a 33.75% survivor pension. Rates are subject to review — check the current NHSBSA figures before relying on them.