NHS ill health retirement calculator: Tier 1, Tier 2 and serious ill health

Last updated 27 September 2026 · By Mustafa Bilgic · Rules from the NHS Pension Scheme Regulations 2015, the 2015 transitional regulations and NHS Business Services Authority guidance

This page covers the NHS Pension Scheme for England and Wales, run by NHS Pensions, with notes on the Scottish and Northern Ireland schemes. It explains the two tiers, the exact Tier 2 formula in the 2015 Scheme, how older 1995 and 2008 Section pensions are added, the serious ill health lump sum and how to apply. The calculator estimates your Tier 1 or Tier 2 pension, or the one-off lump sum, from the figures on your pension statement.

NHS ill health tiers at a glance

To qualify for Tier 1 you must be permanently unable to carry out the responsibilities of your role. For Tier 2 you must meet the Tier 1 condition and also be permanently incapable of regular employment of similar hours to your NHS job, whole time or part time. Permanently means until the scheme's normal pension age.

From 1 April 2022 all members build up pension in the 2015 Scheme, where the build-up rate is 1/54th of pensionable earnings a year. If you moved across from the 1995 or 2008 Section, your ill health pension is paid under the 2015 Scheme: the old section pension is paid alongside it without reduction, with any old section lump sum, and the Tier 2 addition is worked out under the 2015 Scheme.

Who qualifies

To be eligible you need at least two years' membership, you must be under normal pension age, and you must be too ill to work in your present job, with permanent ill health a reason for leaving work. NHS Pensions warns that an employer's decision to end your employment does not automatically lead to ill health retirement benefits, and that receiving incapacity or disability benefits does not either, because the Department for Work and Pensions uses different criteria.

Regulation 91 lists what the scheme manager must weigh, with no single factor decisive: whether you have had appropriate medical treatment, your mental and physical capacity, and the type and period of rehabilitation it would be reasonable for you to undergo, whether or not you have had it. For Tier 2 it also looks at the employment you could do given your training and experience, whether or not such work is available, and it disregards your personal preference and where you live. You are not entitled if you are dismissed, unless the dismissal was because of the infirmity, or if you resign while disciplinary proceedings are under way or have been notified as being considered.

How the Tier 2 addition is worked out in the 2015 Scheme

Regulation 92 sets the Tier 2 addition by a formula: A x (C + E) / C, minus A. That is the same as A x E / C, where:

• A is the total of your 2015 Scheme pensions on the day after your last day of pensionable service, ignoring any additional pension you bought but including pensions increases;
• C is the period of pensionable service, counted in days, over which that pension was built up;
• E is 50% of the number of days from the day after your last day of service to the day before you reach normal pension age, with any part of a day counted as a whole day.

In other words, the scheme takes the average pension you earned for each day of 2015 Scheme membership and credits you with half of the days you had left to normal pension age. The Northern Ireland scheme, which uses the same 50% rule, gives the example of a member with 15 years' membership who retires on Tier 2 at 53 with a normal retirement age of 65: the pension is worked out on 21 years, 15 actual plus 6 years' enhancement, half of the 12 years' prospective membership.

If you also have a 1995 or 2008 Section pension

Many long-serving staff have a pension from the 1995 or 2008 Section as well as the 2015 Scheme. Regulation 28 of the transitional regulations says that when such a member becomes entitled to an ill health pension under the 2015 Scheme, no separate ill health pension and lump sum are paid under the old scheme. Instead the 2015 Scheme pays the old section's earned pension as if you had reached the old normal pension age, so without reduction, together with the old section lump sum, and at Tier 2 adds the Tier 2 addition worked out under the 2015 Scheme. Only one application, on form AW33E, is needed if you moved across without a break of more than five years.

NHS Pensions' tables for the 1995 and 2008 Sections give Tier 2 as two thirds of prospective membership to 60 or 65. Membership from 1 April 2015 to 31 March 2022 is the McCloud remedy period, and you choose whether to take 1995 or 2008 Section benefits or 2015 Scheme benefits for it, which changes the split between the two parts. NHS Pensions says you can ask to make that choice early if you are still working but have an ill health diagnosis that may make you eligible for Tier 2.

Serious ill health lump sum

If you are terminally ill and your life expectancy is less than 12 months, your benefits are calculated as Tier 2 and you can exchange them for a one-off, usually tax-free, lump sum, which does not affect the benefits your dependants are entitled to. NHS Pensions' employer guide explains the method:

• pension up to the level that gives the maximum permitted lump sum is converted at £12 of lump sum for every £1 of pension given up;
• the remaining pension is converted at £5 of lump sum for every £1;
• any 1995 or 2008 Section lump sum is paid in addition, and members with both old section and 2015 Scheme benefits get a payment in two parts, each worked out under its own rules.

The maximum permitted lump sum is set by HMRC's rule for defined benefit schemes: one quarter of the lump sum plus 20 times the remaining yearly pension, which for a £12 conversion rate works out as 20 x 12 x the pension, divided by 56. In the guide's 2008 Section example a £1,900 pension becomes a reduced pension of £1,221.43 and a lump sum of £8,142.84, so the one-off payment is £14,249.99. The 2015 Scheme uses the same formula. The calculator reproduces that example exactly.

How to apply

If you are still paying in, or have opted out but are still in NHS employment, ask your employer's HR or pensions department for form AW33E. Your employer completes part A, you complete part B, and your occupational health doctor, or your GP or specialist, completes part C. A member who has opted out cannot be awarded Tier 2, because they are a deferred member. If you have a deferred pension and have left, apply on form AW240. The employer guide suggests starting the process when a member moves on to half pay, if appropriate, and keeping them employed until the decision so that death in service cover continues.

If you have left the scheme with deferred benefits and become too ill for regular employment, you may be able to take your pension early without reduction, but it is not enhanced. Regulation 94 pays a deferred member the Tier 1 amount.

Reassessment and working again

The medical advisers can award Tier 1 with a right to one reassessment for Tier 2 within three years, or before normal pension age if sooner. You must apply in writing with new medical evidence about the same condition; you cannot ask for a review without it, and a Tier 2 award then runs from the date of the reassessment decision. If you take a Tier 2 pension and go back to work, it is replaced by a Tier 1 pension if your earnings exceed the national insurance lower earnings limit, or if you are still in NHS employment after the first 12 months. More generally, the 2015 Scheme guide says your benefits may be reduced or withdrawn if you take up further employment after retiring early due to ill health.

Scotland and Northern Ireland

NHS staff in Scotland are in the NHS Pension Scheme (Scotland), run by the Scottish Public Pensions Agency, which calls the tiers lower tier and upper tier. The upper-tier enhancement is up to two thirds of prospective service to normal pension age in the 1995 and 2008 Sections, or up to half of prospective service to State Pension age in the 2015 Scheme. The HSC Pension Scheme in Northern Ireland uses two thirds for 1995 and 2008 members and 50% of prospective membership for 2015 scheme members.

Worked example

A nurse born on 20 May 1980 has a normal pension age of 68, on 20 May 2048. She leaves on 30 September 2026 with a 2015 Scheme pension of £4,000 a year built up since 1 April 2022, which is 1,644 days of membership, and a 1995 Section pension of £12,000 with a lump sum of £36,000. At Tier 1 she receives £16,000 a year and the £36,000 lump sum. There are 7,902 days from the day after she leaves to the day before normal pension age, so E is 3,951 days and the Tier 2 addition is £4,000 x 3,951 / 1,644 = £9,613.14, a Tier 2 pension of £25,613.14 a year plus the lump sum. These figures are our calculation from regulation 92.

Sources and methodology

The calculator applies regulation 92(3) with dates counted in days, regulation 28 of the transitional regulations for old section pensions, and the serious ill health method in NHS Pensions' employer guide with HMRC's maximum lump sum equation. It reproduces the guide's 2008 Section example to the penny and its 1995 Section example to within a few pounds, because the guide rounds the pension given up to whole pounds there. It does not model the McCloud remedy choice, breaks in service, partial retirement or annual allowance tax.

• NHS Pension Scheme Regulations 2015, regulations 77, 90 to 95 and 109, on legislation.gov.uk, and the Transitional and Consequential Provisions Regulations 2015, regulation 28.
• Applying for ill health pension benefits and the member and employer ill health guides, NHS Business Services Authority.
• 2015 Scheme members guide, NHS Pensions.
• Pensions Tax Manual PTM063240, HM Revenue and Customs.
• Ill health retirement, Scottish Public Pensions Agency and HSC Pension Service.
• State Pension age timetable, GOV.UK.

Frequently asked questions

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