If you work as a freelance locum GP and pension your income through the NHS Pension Scheme, you may have noticed that your contribution rate seems higher than your earnings should justify. That is annualisation at work.
Annualisation is the rule that scales your part-year locum earnings up to a full-year equivalent, then uses that grossed-up figure to decide which contribution tier you pay. Work fewer days at a good daily rate and the rule can push you into a higher percentage band than your actual income would suggest.
This guide explains how annualisation sets your tier for 2026/27, who it catches, who is exempt, and how the maths actually works. It is written for locum GPs, and the deductibility and admin of all this is what we handle for locum doctors at Zmartly.
A quick note on scope. Annualisation applies to practitioner members of the 2015 NHS Pension Scheme in England and Wales. Scotland and Northern Ireland run their own scheme rules, so check your home-nation guidance if you work there.
What is annualisation in the NHS Pension Scheme?
Annualisation is a method of working out your contribution tier. Instead of looking at the actual pensionable income you earned, the scheme grosses your earnings up to what you would have earned if you had worked across the whole scheme year (1 April to 31 March), then reads your tier off that annualised figure.
The tier that comes out of the annualised calculation is then applied to your actual pensionable earnings. So you do not pay contributions on income you did not earn, but you can pay a higher percentage on the income you did earn.
The important reassurance is this: annualisation only affects the rate you pay. It does not change the pension benefits you build up. Your earned pension is based on your actual pensionable pay, not the annualised figure.
Why does annualisation push locum GPs into a higher tier?
For a salaried employee, the contribution tier is based on a steady annual salary, so there is nothing to gross up. Locum GPs are different. You are paid per session or per day, often across scattered periods, and only the days you actually work count as pensionable service.
If you earn well on the days you work but do not work the full year, your daily earning rate is high. Annualisation takes that daily rate and projects it across 365 days, which can land you in a tier well above where your real income sits.
That is the quirk locum GPs feel most: a part-time, part-year working pattern combined with a strong daily rate produces a high annualised figure and therefore a higher contribution percentage.
How is annualised pensionable pay calculated?
The formula is straightforward:
Annualised pensionable pay = total pensionable pay / days of pensionable service x 365
Your "days of pensionable service" are the days you actually worked and pensioned as a locum during the scheme year. Your total pensionable pay is the locum income you pensioned over those days.
You then take that annualised figure, find the tier it falls into using the 2026/27 contribution table below, and apply that tier rate to your actual pensionable earnings for the year.
What are the NHS Pension contribution tiers for 2026/27?
The member contribution rates have been fixed since 1 April 2024. What changes each year are the pensionable pay thresholds, which are uplifted by the previous September's CPI. For 2026/27 the thresholds rose by 3.8% (September 2025 CPI), and because the Agenda for Change pay award (3.3%) was lower than CPI, there was no further amendment to the bands.
Here are the member contribution tiers that apply from 1 April 2026:
| Annualised pensionable pay | Contribution rate |
|---|---|
| Up to £13,259 | 5.2% |
| £13,260 to £28,854 | 6.5% |
| £28,855 to £35,155 | 8.3% |
| £35,156 to £52,778 | 9.8% |
| £52,779 to £67,668 | 10.7% |
| £67,669 and above | 12.5% |
For context, employers contribute 23.7% of your pensionable pay on top of your own contribution, so the scheme remains generous even after annualisation bites.
Who has to annualise, and who is exempt?
This is where many locum GPs get caught out, so the distinction is worth getting right.
You generally have to annualise if you are solely a GP locum and you did not have continuous practitioner employment for the whole scheme year. Only the days you actually work count as pensionable service, so unless that covers the full year, your earnings are grossed up.
You generally do not have to annualise if you hold a Type 1 (GP partner) or Type 2 (salaried or out-of-hours GP) role that runs continuously across the full scheme year, even part-time. A GP who is salaried just one day a week from 1 April to 31 March is not annualised, because the role spans the whole year.
In short:
| Your working pattern | Annualised? |
|---|---|
| Locum only, not working the full scheme year | Yes |
| Continuous Type 1 or Type 2 role for the full year (even part-time) | No |
| Locum plus a Type 1 or Type 2 role spanning the full year | Generally no |
| Gap between contracts during the year | Likely yes |
Because the rules let you add all your pensionable practitioner roles together before deciding the tier, a continuous salaried or out-of-hours role across the year can take you out of annualisation entirely. That is why some locum GPs deliberately keep a small underlying role in place.
Illustrative example: how annualisation changes a locum GP's tier
Illustrative example. Imagine Dr Patel works as a freelance locum GP in England during 2026/27. She pensions £42,000 of locum income across 180 days of pensionable service in the scheme year.
Without annualisation, £42,000 would sit in the 9.8% tier (the £35,156 to £52,778 band).
With annualisation, her pay is grossed up:
£42,000 / 180 x 365 = £85,167 (annualised)
That annualised figure of £85,167 sits in the top tier, so her contribution rate becomes 12.5%.
The 12.5% rate is then applied to her actual pensionable pay of £42,000:
£42,000 x 12.5% = £5,250 in member contributions.
Without annualisation, the bill would have been £42,000 x 9.8% = £4,116. Annualisation costs Dr Patel an extra £1,134 in contributions for the year, even though her benefits are based on the same £42,000.
These figures are illustrative. Your own position depends on your actual pensionable pay, the days you worked, and any other practitioner roles you hold.
How do locum GPs pension income and apply the right tier?
You pension locum income by completing the GP locum Forms A and B and submitting them, with your contribution payment, to PCSE in England (or your local health board in Wales).
Two timing rules catch people out. You cannot pension locum work carried out more than ten weeks ago, and forms should reach PCSE no later than the seventh of the month following the month the income was received. Miss the window and you can lose the ability to pension that work at all.
Annualisation itself is reconciled after the year end, when your total pensionable days and pay for the scheme year are known. That is when the annualised tier is confirmed and any difference is settled. Keeping clean records of your pensionable days through the year makes that reconciliation far less painful.
Getting the day count, the forms and the tier right is fiddly, and the cost of getting it wrong is real money. It is exactly the kind of thing we manage for locum doctors, alongside your wider self-assessment and tax position.
Frequently asked questions
Does annualisation reduce the pension I build up?
No. Annualisation only affects the contribution rate you pay. The pension benefits you earn are based on your actual pensionable pay, not the grossed-up annualised figure, so your retirement benefits are unaffected.
How do I work out my annualised pensionable pay?
Divide your total pensionable locum pay for the scheme year by the number of days of pensionable service, then multiply by 365. The resulting figure tells you which contribution tier applies, and that tier rate is charged on your actual pensionable pay.
I only locum a few days a year. Do I still have to annualise?
If you are solely a locum and do not have continuous practitioner employment across the full scheme year, yes, your earnings are annualised. Working few days at a strong daily rate is exactly the pattern that pushes annualised pay, and therefore your tier, higher.
Can holding a salaried or out-of-hours role stop me being annualised?
Often, yes. A Type 1 or Type 2 role that runs continuously across the whole scheme year, even part-time, generally takes you out of annualisation, because the role spans the full year. Many locum GPs keep a small underlying role for this reason.
Did the NHS Pension contribution rates change for 2026/27?
The rates themselves have not changed since 1 April 2024. For 2026/27 only the pensionable pay thresholds moved, uplifted by 3.8% in line with September 2025 CPI. The tiers run from 5.2% up to 12.5%.
