NHS Pension Partial Retirement: Rules & Pay 2026/27

Last updated: 28 September 2026 · Figures verified against the NHS Employers 2026/27 pay circular.

By the NHS Bands Pay editorial team

This page is general information about the NHS Pension Scheme. It is not financial advice — take independent financial advice before making retirement decisions. See our disclaimer.

What partial retirement is

Partial retirement (sometimes called "drawdown" or "retire and return" in its older forms) lets you take pension benefits while staying in NHS employment. Instead of the cliff-edge of full retirement, you reduce your working pattern, draw some or all of the pension you've built up, and keep earning — and keep accruing pension — on the reduced hours. It sits in the 2015 scheme rules; legacy 1995/2008 benefits have their own retirement provisions.

Eligibility: who can take it

• An active member of the 2015 scheme (which includes everyone accruing since 1 April 2022).
• Reached the minimum pension age — currently 55, rising to 57 in 2028.
• Able to reduce pensionable pay by at least 10% versus the previous 12 months.

Members with legacy 1995/2008 service need to check how those benefits are treated separately — 1995-section benefits, for instance, have a normal pension age of 60 and different early-retirement terms (see sections compared).

The 10% pay-reduction rule

The core condition: your pensionable pay must fall by at least 10% compared with the 12 months before, and the reduction is expected to last at least 12 months. In practice this is achieved by:

• Reducing hours — e.g. full-time 37.5 hrs to 30 hrs (a 20% cut).
• Stepping down — e.g. moving from a Band 7 to a Band 6 role.
• A combination — fewer hours at a lower band.

The 10% is measured on pensionable pay, so it includes the effect on enhancements and overtime that count toward pension. A 10% hours cut that also reduces unsocial-hours earnings will comfortably clear the bar.

Worked example: Band 6 nurse

A Band 6 nurse at the top of the band (£48,117 in 2026/27) reduces from 37.5 to 30 hours (80%):

The nurse draws salary of £38,494 plus pension benefits built up so far, while still accruing £713 a year of new pension on the reduced salary. Whether the drawn benefits are reduced depends on age — see actuarial reduction below.

Taking it twice: staging your wind-down

The 2015 scheme allows partial retirement to be taken on up to two occasions. A common pattern: at 58, reduce to 4 days a week and draw 50% of accrued benefits; at 61, reduce to 3 days and draw the rest. Each occasion needs its own 10% reduction measured against the preceding position. This staged approach is one of the most tax-efficient ways to wind down, because it spreads pension income across years.

What happens to the pension you don't draw

• Benefits you don't draw stay invested in the scheme and continue to be revalued.
• You keep accruing new 2015-scheme pension on your reduced salary (1/54th per year).
• Your death-in-service cover continues on the reduced pensionable pay (see death in service).
• Employee contribution tiers are reassessed on the reduced whole-time-equivalent pay — dropping a tier boundary can cut your contribution rate (2025/26 official tiers; 2026/27 provisional).

Actuarial reduction: the cost of drawing early

Drawing 2015-scheme benefits before your normal pension age (linked to state pension age) triggers actuarial reduction — a permanent percentage cut for each year you draw early, reflecting that the pension will be paid for longer. The reduction applies to the benefits you draw, not to the benefits you leave in. This is the single most expensive feature of partial retirement: drawing at 58 with a state pension age of 67 means roughly 9 years of reduction. Get a personal estimate from NHS Pensions before committing — the percentages are fixed by the scheme, not negotiable.

Getting employer agreement

Partial retirement needs an agreed change to your working pattern — which means your manager and HR must agree to the reduced hours or the stepped-down role. In practice:

• Raise it 6–12 months before your target date — rotas and replacements need planning.
• Put the proposed pattern in writing and link it to service needs (many managers welcome experienced staff staying part-time).
• Confirm the pensionable-pay reduction will clear 10% — get payroll/HR to verify the figure.
• Check whether stepping down affects any flexible working agreements already in place.

Pre-application checklist

1. Get a pension estimate from NHS Pensions showing benefits with and without actuarial reduction.
2. Model the 10% reduction on your actual pensionable pay (including enhancements).
3. Check annual allowance position — drawing benefits doesn't reset allowance calculations.
4. Consider McCloud implications if you have remedy-period service and legacy benefits.
5. Agree the new working pattern in writing with your manager.
6. Take independent financial advice — partial retirement interacts with tax, state pension and estate planning.

Partial retirement and the McCloud choice

Taking partial retirement triggers the deferred choice underpin for any remedy-period service you're drawing: at the point of partial retirement, eligible members choose legacy vs 2015 terms for the 2015–2022 service being drawn — you don't wait until full retirement. This makes the McCloud choice real earlier than many expect, so get your dual-figure estimates before your first partial-retirement application, not after. Benefits you leave undrawn keep their deferred choice for later, when you take them. If your McCloud figures aren't yet available when you want to go, talk to NHS Pensions about timing — applying without them means choosing without the full picture.

Tax on pension income while working

Your pension income is taxable and stacks on top of your salary for income-tax purposes — so drawing pension while working part-time can push you into a higher marginal rate than either income alone would. The classic partial-retirement tax picture: £30,000 of salary plus £12,000 of pension = £42,000 of taxable income, all within the 20% basic rate — but add a second drawdown stage or regular bank shifts and the 40% threshold (£50,270) approaches quickly. HMRC taxes the combined income through your tax code, so check it after every change; underpaid tax from a wrong code arrives as an unwelcome bill later. One planning point to raise with an adviser: up to a quarter of each pension pot can usually be taken as tax-free lump sum — and timing those lump sums across two partial retirements (rather than taking everything at once) is one of the main levers for keeping lifetime tax down.

Frequently asked questions

What is partial retirement in the NHS pension?

An arrangement letting 2015-scheme members draw some or all of their pension benefits while continuing to work — provided they reduce their pensionable pay by at least 10%, for example by cutting hours or stepping down a band.

What is the 10% rule for NHS partial retirement?

To take partial retirement you must reduce your pensionable pay by at least 10% compared with the previous 12 months — typically by reducing hours, with the reduction expected to last at least 12 months.

Can I take partial retirement more than once?

Yes — the 2015 scheme allows partial retirement to be taken on up to two occasions, letting you draw down pension in stages as you wind down toward full retirement.

Does partial retirement affect my remaining pension?

Yes: you keep building up pension on your reduced salary after partial retirement, and any benefits you don't draw continue to grow. But drawing benefits early usually means actuarial reduction if you're below normal pension age.

Who can take NHS partial retirement?

Active members of the 2015 scheme who have reached the minimum pension age (currently 55, rising to 57 in 2028). Legacy 1995/2008 section benefits have different retirement rules — check how each part of your pension is treated.

Do I need my employer's agreement for partial retirement?

Effectively yes — you need an agreed reduction in hours or responsibilities producing the 10% pay cut, which requires your manager's agreement. Start the conversation with HR and your manager well before you plan to act.

Sources and independence

Source: NHS Business Services Authority — NHS Pensions (partial retirement rules, eligibility, 10% reduction).

Source: NHS Employers — 2026/27 pay award announcement (pay values).

This is an independent guide and is not affiliated with the NHS or NHS Pensions. It is general information, not financial advice — partial retirement has permanent effects on your benefits. Take independent financial advice from an FCA-regulated adviser before applying. See our disclaimer.