Many experienced dentists reach a point where stopping completely feels too abrupt but carrying on at full intensity no longer appeals. Since 1 October 2023 the NHS Pension Scheme has offered a genuine middle path. Partial retirement, sometimes called flexible retirement, lets you draw part of your pension while you keep working at a reduced commitment, and crucially you keep building further pension at the same time. This guide explains how it works for dentists, the conditions you have to meet, and the tax interaction that catches people out: the drawn pension is taxable income that stacks on top of the profit you continue to earn.
What partial retirement is
Partial retirement is the ability to draw between 20% and 100% of your accrued NHS pension benefits without leaving your job and without a break in service, then keep working. From 1 October 2023 this flexibility applies across all sections of the scheme, including the 1995 section, in England and Wales (Northern Ireland followed on 1 April 2024). That last point matters: before October 2023 a member with old 1995 service generally could not draw it while remaining active, and the change opened the door for a large number of long-serving dentists.
The mechanics are straightforward in principle. You stay an active member. You agree a reduced working arrangement. You choose how much of your accrued pension to crystallise. And you continue to accrue new pension in the 2015 scheme on the work you keep doing. You are, in effect, running two streams at once: an income stream from the pension you have drawn, and a still-growing pension from the work that continues. If you are not yet clear on which section your historic benefits sit in, our guide to the 1995, 2008 and 2015 sections explained for dentists sets out the normal pension ages and accrual rules that determine what you are drawing.
Who can use it and when
To take partial retirement you must be over your minimum pension age, which is generally 55 (and rising under the government timetable). You must also agree a new working arrangement that reduces your pensionable pay or commitment. The reduction is the gateway condition, and the way it applies to dentists is slightly different from how it applies to salaried NHS staff.
A salaried member reduces their pensionable pay. A dental practitioner, whose pensionable earnings derive from NHS-derived income rather than a fixed salary, reduces their commitment, meaning a genuine cut in the level of NHS engagement. In practice that usually means reducing clinical sessions, dropping a day, or cutting back UDA commitment. The substance has to change. NHS Pensions and the relevant administrator will look for a real reduction, not a relabelling of the same workload. Our guide to pensionable pay for dentists explains how practitioner pensionable earnings are calculated, which is the figure both the drawn amount and the continued accrual are built on.
The 10% reduction condition
This is the rule members most often get wrong, so it is worth being precise. You must reduce pensionable pay or commitment by at least 10%. For dentists that is a 10% reduction in commitment. The reduction is required for the first 12 months after you take partial retirement. After that 12-month period you can increase your commitment again without losing the partial retirement or the benefits you have already drawn.
Two failure modes are common. The first is making a reduction that is not genuinely 10%, or that the paperwork does not properly evidence; the application then fails. The second is increasing hours or UDA commitment back up inside the 12-month window, which can invalidate the arrangement. The safe approach is to make a real, documented reduction of at least 10%, hold it firmly for a full 12 months, and only then consider building back up if you want to. Treat the 10% as a hard floor for a full year, not a target to drift around.
Drawing 20% to 100%: the choice
You choose what proportion of your accrued benefits to crystallise, with a 20% minimum and a 100% maximum, and you can do this in up to two drawdown events. The trade-off is income now versus pension later. Drawing a larger proportion gives you more income immediately but leaves less of your benefit to keep growing. Drawing the 20% minimum keeps most of your pension intact and continuing to revalue.
There is no single right answer. A dentist who needs to replace a meaningful slice of income because they are dropping two days a week may draw 50% or more. A dentist who is comfortable on a smaller step-down and wants to protect future value may draw the minimum. Because you can spread the crystallisation across two events, you can also stage it: draw a modest amount now and a further tranche later as your needs change, up to the 100% ceiling in total.
When you choose the proportion, it helps to think about which benefits you are crystallising. If you hold service across the 1995, 2008 and 2015 sections, the amount you draw will be made up of pieces from each, and each section has its own normal pension age and its own lump-sum treatment. Drawing 40% of your total accrued benefits is not the same as drawing 40% from a single section; the administrator works out how the chosen proportion maps across your service. This is one reason that modelling the figure properly, rather than picking a round percentage, pays off: the income you actually receive depends on the mix of sections behind the percentage you select, and on whether any part of it is being drawn before that section's normal pension age.
You keep accruing: re-accrual in the 2015 scheme
This is the feature that makes partial retirement attractive rather than just an early draw. After partial retirement you remain an active member and continue to build pension in the 2015 scheme at 1/54th of your pensionable earnings each year, with active revaluation at CPI plus 1.5%. So while a drawn pension is being paid out, a fresh slice of 2015 pension is being added on the work you keep doing.
Compare that with full retirement, which ends accrual entirely. A dentist who fully retires forgoes every future 1/54th. A dentist who partially retires keeps earning them. Over several years of continued reduced-commitment work, the re-accrued 2015 pension can be a genuinely valuable addition, especially with active revaluation running above CPI. The headline framing is simple: you draw one pot while a new one continues to grow.
There is a subtlety worth flagging on the accrual side. Because partial retirement requires a reduction of at least 10% in your pensionable pay or commitment, the new accrual you build afterwards is based on that reduced level of earnings. So the fresh slices of 2015 pension are a little smaller than they would have been at full commitment, which is the natural consequence of working less. That is not a flaw in the route; it is simply the trade-off of stepping down. The point is that the accrual continues at all, which a full retirement would not allow. For a dentist with a decade or more still in them at a reduced pace, that continued, revaluing accrual on reduced earnings can still add up to a meaningful amount by the time they finally stop.
The tax interaction: pension income plus continued earnings
Here is the part that surprises people. The drawn pension is taxable income, and it stacks on top of your continued self-employed or associate profit. It is not taxed in a separate, gentle band of its own. If your reduced-commitment trading profit already fills your personal allowance and basic-rate band, the pension is taxed at your higher marginal rate, and a large combined figure can reach the £100,000 point where the personal allowance begins to taper away at £1 of allowance for every £2 of income.
The tax-free lump sum, where the section provides one, is separate and does not form part of this stacking calculation. But the regular pension does. Modelling the combined income, not the pension in isolation, is the whole game.
It is worth being concrete about why the stacking matters so much for a dentist. As a self-employed practitioner you pay income tax and Class 4 National Insurance on your trading profit. The drawn pension is taxed on top of that profit, but pension income does not attract Class 4, so the two streams are not taxed identically. What unites them is that they share the same set of income tax bands and the same personal allowance. So the order in which they fill the bands is fixed by the rules, not by you, and the practical effect is that the pension typically falls into whatever band sits above your continued profit. If that profit has already used your basic-rate band, the pension is taxed at 40%, and if the combined total crosses £100,000, every £2 above that point strips away £1 of personal allowance until it is gone, which produces an effective marginal rate on that slice well above the headline 40%. A dentist who draws a pension without modelling this can find that a large part of the drawn income is taxed far more heavily than they expected.
The timing of the drawdown within the tax year is a lever here. Because the pension and the profit are tested together across a full tax year, starting the pension partway through a year produces a part-year pension figure in that first year, which can keep the combined total lower in the transition year before the full-year position settles. None of this changes the underlying decision, but it can soften the band impact in the year you step down, which is often the year the change feels most pronounced.
Example A: drawing 50% and the band impact
A 58-year-old principal has a full NHS pension entitlement of £40,000. She draws 50%, so £20,000, under partial retirement, and reduces her commitment by 10%, which cuts her practice profit from £90,000 to about £80,000. Her combined taxable income is now £80,000 of profit plus £20,000 of pension, which is £100,000. That sits entirely in the higher-rate band and lands right at the edge of the £100,000 threshold where the personal allowance starts to taper. The lesson is that the drawn pension does not float free; it sits on top of her earnings and can push her into the worst part of the tax system. This example uses 2025/26 figures and the partial retirement rules in force from 1 October 2023.
Example B: re-accrual while drawing
The same dentist keeps working at her reduced commitment and continues to accrue in the 2015 scheme at 1/54th of her pensionable earnings, with active revaluation at CPI plus 1.5%. So while £20,000 a year is being paid out from the benefits she crystallised, a fresh slice of 2015 pension is being built on the work she continues to do. A full retirement would have forgone that accrual completely. This is the structural advantage partial retirement delivers and a full draw does not, tagged to the 2015 CARE accrual of 1/54th and revaluation of CPI plus 1.5%.
The annual allowance angle while drawing and accruing
Because you are still accruing, you still have a pension input amount each year and the annual allowance test continues to apply. For 2025/26 the standard annual allowance is £60,000, tapering where threshold income exceeds £200,000 and adjusted income exceeds £260,000, down to a minimum of £10,000. The measure for a defined benefit scheme is the capitalised growth in your benefits, not the contributions you pay, so a year of continued accrual still produces an input amount that has to be tested.
There is a separate trap if you flexibly access a defined contribution AVC pot as part of stepping down. Flexibly accessing a DC pot can trigger the £10,000 money purchase annual allowance, which restricts future tax-relieved DC saving. Drawing your main NHS defined benefit pension under partial retirement does not by itself trigger that, but the AVC interaction is easy to overlook. Our guide to aggregating the NHS annual allowance with private SIPP saving works through how the NHS input amount and any private contributions are measured together.
Early-draw reductions still apply
Partial retirement does not switch off the early-retirement reduction. If you partially retire before the normal pension age of the section the benefits sit in, the portion you draw is actuarially reduced for early payment, just as a full early pension would be. The reduction is permanent and set using NHSBSA factors. Partial retirement gives you flexibility about how much to draw and lets you keep accruing, but it does not let you draw early without the reduction.
Example C: partial retirement before normal pension age
A dentist whose 2015-scheme normal pension age is 67 partially retires at 60, drawing 40% of her benefits seven years early. That 40% slice is actuarially reduced for early payment, so it pays less than its unreduced face value. The exact factor is set by the scheme actuary and published by NHSBSA, and varies by section and by how many years early the draw is, so we do not assert a single fixed percentage here. The point is simply that partial retirement does not remove the reduction; the early-drawn portion is reduced exactly as a full early pension would be. For the reduction mechanics in full, see our guide to taking the NHS pension early and the tax impact for dentists. Tagged to 2025/26 and the early-draw actuarial reduction principle.
Scheme Pays debts crystallise on the drawn portion
If you have ever settled an annual allowance charge using Scheme Pays, the scheme recorded a reduction to your eventual benefits in exchange for paying that charge. That reduction is recovered when benefits are paid, and that includes the portion you draw under partial retirement. So the drawn figure can come out lower than the headline accrued amount would suggest, because the Scheme Pays debit is applied. Flag this in your planning so the number is not a surprise. Our guide to the NHS pension Scheme Pays election for dentists explains how the debit is built up and recovered.
Partial retirement vs full retirement vs retire-and-return
It helps to see the three routes side by side. Partial retirement keeps you in post and accruing, with a 10% step-down and the ability to draw 20% to 100% of your benefits. Full retirement ends your accrual entirely and pays the pension, with no further 2015 build-up. Retire-and-return is a distinct route: you fully retire, take a break in service (commonly 24 hours), and then return to NHS work as a re-employed member, which is administratively heavier and historically interacted differently with abatement and re-accrual.
For a dentist who simply wants to wind down gradually while protecting future pension, partial retirement is usually the cleanest of the three. Retire-and-return is a separate decision with its own mechanics, so we keep it light here; the key contrast is that partial retirement needs no break in service and keeps you accruing, whereas retire-and-return interrupts your membership.
A practical sequence for a dentist
If you are weighing partial retirement, a logical order helps. First, model the income: the drawn pension plus the reduced-commitment profit, combined, with the band impact spelled out, not the pension alone. Second, confirm the 10% commitment reduction is genuine and properly documented, and that you can hold it for a full 12 months. Third, decide how much to draw, the 20% minimum, the 100% maximum, or something in between, and whether to use one or two events. Fourth, time the drawdown to suit your tax year so you do not bunch income unhelpfully. Fifth, apply around four months ahead, the standard NHS application lead time, so the pension starts when you step down rather than after a gap.
Differentiate this from ill-health retirement, which is a separate route with a different trigger. Ill-health retirement is for a member who becomes permanently medically unfit to work and is assessed against the Tier 1 and Tier 2 medical tests; it is not a planned, healthy step-down and it carries no actuarial reduction. Partial retirement is the healthy, planned, gradual route. If your situation is health-driven rather than a lifestyle wind-down, read our guide to ill-health retirement for dentists instead, because the eligibility and benefit calculation are entirely different.
Common errors to avoid
The mistakes cluster around the same handful of points. Members fail to make a genuine 10% commitment reduction, and the application falls over. They assume accrual stops, when in fact it continues in the 2015 scheme. They forget the drawn pension is taxable on top of continued earnings and are caught by a higher marginal rate or the personal-allowance taper. They partially retire early without modelling the actuarial reduction on the drawn portion. And they ignore an outstanding Scheme Pays debit that reduces the figure when benefits are paid. Each of these is avoidable with modelling done before the application goes in, not after.
How we help dentists plan partial retirement
We recently worked with a principal who wanted to wind down to four days and start drawing part of the NHS pension. We modelled the drawn pension on top of the reduced-commitment profit so the combined band impact was clear before anything was committed, confirmed the 10% commitment reduction was genuine and documented to survive scrutiny, and timed the drawdown to keep the combined income out of the worst part of the tax system. The principle we work to is simple: never look at the pension in isolation. Partial retirement is a powerful way to step down while keeping your 2015 accrual alive, but the value only holds once the tax stack on your continued income has been modelled properly.