Nhs pensions which is best

The current job allows me amazing flexibility and am staying on considering the pension benefits. However as my salary is frozen, the value of my salary will erode over time and maybe at some point it will not be worth staying for the pension.

Hi, Although the pension was frozen, it does not mean no increase. In a final salary scheme such as the NHS pension, the benefits will continue to rise, although not linked to service or pay. They aim to be protected against inflation by increasing in line with the pensions increase act From 1st April the increases have been linked to the consumer price index CPI.

It can depend on what measure of inflation you use, but none the less there is a degree of protection. I hope this answers your question.

I will be doing months a year with an annual earning of , pounds. Is there a risk that the retirement age will continue to be increased? Dear Karen If you work on the basis that part of your earnings should be put aside for retirement provision, then the NHS pension is a good environment.

As ever there are circumstances where it is not appropriate and it is alway wise to take advice on your specific circumstances. The retirement age will move as it is linked to the state pension age, its a case of when. Kind Regards. With the pension annual allowance taper in mind , is it worth leaving the NHS scheme, at least for part of a tax year , possibly rejoining on an ad hoc basis for several months each tax year, to minimise this taper effect?

I have 13 years service in scheme and over 2 years in scheme. Many thanks. I would need to check your calculations regarding your income. Your deemed pension contribution needs to be added back into the calculation, so you may find it higher than you anticipate. The notional pension figures can be requested from the pensions agency. The course of action you suggest is certainly an option although not one that we recommend very often, as it can have side effects.

If your aim is to increase your pension then in most cases it is better to remain in the scheme. It is an area that we would normally suggest you take advice. We have constructed a system that allows us to give an indication of various courses of action that may be of benefit. I have been paying 6. However, fundamentally there are two reasons for sticking with the scheme. I understand that at State Pension age, I would then start receiving the money due from the scheme on top of the payments.

Is that correct? You are correct in what you say. You may be happy to suffer this actuarial reduction in favour of having a bit more income at age It is important to note, which I think you are aware of, that if you draw your benefits at 60 and return to work within the NHS you cannot re-join the scheme and build up further benefits.

Are you referring to the fact that you could contribute to a personal pension plan instead? If so, you are correct in thinking this is the case, although there would be limits on how much you could put into the personal pension. Thanks so much for the answer. Very helpful. So I would take my pension at 60, and wait 7 years for the benefits of that boosted pension pot.

From 60 to 67, I would still work part-time to supplement my pension income. I suppose I could start a private pension plan now at age 46 with the money that would otherwise go into additional payments, which would be more flexible. You could do as you are suggesting and this would be a reasonable way of generating an additional pension.

However, there are advantages and disadvantages when compared to the possibility of a personal pension plan. Not all personal pensions are made the same! And not all personal pensions are expensive although that is as much to do with perception as anything! Once you have made a comparison, you can make an informed decision based on the costs, potential performance, attitude to risk, flexibility of retirement date, the fact that the personal pension could be passed to members of your family, non-investment risk of additional NHS pension etc etc.

Is it worth my while joining the scheme now or would I be better off opting out? Our general view is that the NHS pension scheme is an excellent scheme and you would need good reasons not to join it. There are some that it is not right for, but they are few and far between. If you have concerns about joining the scheme it may be suitable to seek advice. I am 56 and have worked for the nhs for 9 years, i am now considering accepting the offer of employment from a private hospital but am concerned re my pension.

I plan to work until i am 67, would i end up with a substantially smaller pension by leaving the nhs? I would of course join my new employees scheme but understand that I cannot fo this until i have worked for them for 6 months. The NHS is a final salary scheme and as such is typically viewed as the gold standard of pensions. It is likley that you may be moving to an inferior pension system. Opted out the scheme for a few months 4 months due to financial problems.

Can you calculate how much would that be? Is it worth to continue with the NHS pension scheme. The benefits will have been increased annually by CPI. It is worth rejoining the pension scheme, whenever you are able, in my opinion, on account of the fact that the NHS employer is deemed to make a contribution to your pension of The combination of employee and employer contribution is one of the reasons why the resultant Nhs pension benefits are still considered to be generous.

I do not feel that you should be concerned about losing the money that you have paid in. Regardless of Brexit, you have effectively paid into a scheme that is state backed and whether you are a foreign national or British, you can expect to receive a pension.

Have searched in vain for an answer to this question and wondered if you might be able to help. Can I stop paying into the pension and continue with just my pension Added Years contributions? As an example:. At the end of year 2, assuming CPI stayed the same, then this amount would increase by 4.

Hello, I joined the pension scheme in and bought added years on I have no idea when I would like to retire! Or are the additional years still a good bet? If so, do you have advisers I could book an appointment with? Regards, Greg. The added years are a percentage of earnings. The difference being as a junior doctor your on call was not superannuated, therefore the payments would be less and your pension based on a lower income.

I would probably call into question your calculations as they are based on current figures. We would need to do projections based on your future earnings. We have a calculator that takes various scenarios into account and we could run this with and without added years.

This may provide you with better figures to base your analysis on. Please feel free to give me a call on or email me at owen legalandmedical. My salary was when I left. I worked as a locum with no pension scheme for few years as I did not know that I could have continued to pay. My annual pensionable salary is I am planning to retire at the age of 60 years.

Is it worth continue with the scheme as I am paying almost a year Is there a way add the new service to the old one. The break was for more than 7 years. The benefits that you accrued up until are likely all to be scheme membership benefits — these are potentially available at age 60 without actuarial reduction.

You are paying a gross figure of Your employer is deemed to be paying Benefits are available without actuarial reduction at the normal retirement age for each scheme age 60 for scheme and state pension age for the scheme. If you take your scheme benefits at age 60 then you will suffer an actuarial reduction which will be significant.

Dear Owen, If I retire at 60 years. I would take the full pension. Then if I stop paying into the pension; but not cash it till the state pension age. You could take that course of action. This is the same across all employees however contribution rates vary. For the year 1 pot, is the pot then multiplied by the factor every year for the duration of the pension? Or will it be multiplied by the factor for each corresponding year i.

I hope that helps. Current contributions are 9. I am not sure how much will I be getting back in the future, though there is no plan for exiting this scheme. Provided i will be contributing till 68 and with the NHS, can you provide me a link or a calculator as to how much will be my annual income after i retire.

Your eventual pension is based on your career earnings. For lots of reasons part-time working, early retirement, speed of advancement etc etc , it will be difficult to predict your career earnings and therefore your pension income in retirement. The pension scheme has changed significantly but I feel that this sort of figure is probably achievable at retirement.

Is it possible to cash in the pension pot rather than draw a pension, as with personal pensions? Other than in exceptional circumstances terminal illness , it is impossible to take the pension in any other way other than a lump sum and income. However, you can commute exchange income in favour of a bigger lump sum. There are limits but if you ask the NHS to tell you what the maximum lump sum is with a reduced pension, they will be more than happy to do this.

Many thanks for your comment. Whilst there are a number of NHS specialisms, we ourselves specialise in advising doctors and dentists which is reflected in the examples used in this blog post. Hi I am a 55 yr old GP partner and have been paying added year for over 10 years and would be grateful if you could inform me if added years are considered a good financial option compared with a Personal Pension such as a SIPP are they similar to the main pension in terms of return on investment. I realise that it is now possible to cancel ongoing payment into added years.

The list is long! They are not without their issues either. You mention lifetime allowance but you also need to consider the annual allowance. They could cause further tax liabilities which can impact on their value for money. Suitability is very much in the eye of the beholder! I have a private pension in Spain but have not done regular contributions to it due to financial reasons. I think when retired would go back to Spain and my idea is to do that around y.

My advice would be to join the NHS pension scheme. However, to make a final decision would require a one-to-one meeting to consider all your current financial details. Hi I know this post is mainly for Doctors and Dentists but I would like to ask a few questions please. As it seems everywhere i read this seems the case that one years payment into the pension means I will get the above every year?.

This process is applied to each year of pensionable income. Whilst in payment the pension also increases by cpi. Hi I have 16years frozen in the scheme and I opted out of the when it came in as my intention as always been to retire at The new scheme attracts large penalties if withdrawn at My annual salary is , I have been considering a private pension to top up my pension at Would it be best to do this or pay the scheme and take the hit of charges from taking it early?

I am currently 40yrs. You could take your pension benefits independently of the scheme benefits but this would preclude you from contributing any further contributions to the scheme. This may suit your personal circumstances in relation to income required at age 60 for instance.

With regards to a personal pension versus the scheme, it is very much down to your individual circumstances and you should speak to a financial adviser before you make a decision and take any action. The NHS pension scheme benefits from an employer contribution of The personal pension is more flexible and can provide benefits from any age after 55 being increased in coming years.

The employers contribution deemed to be In addition, as you are probably aware, there are other multiple scheme benefits. These sort of benefits are expensive to provide, hence the requirement for a large employer contribution. I work as a dentist but I am paid an hourly rate. My NHS superannuation has historically been related to my NPE and this is related to my contract value ie: not what I am actually paid. I he legally able to do this? I must be misunderstanding this all somehow.

Perhaps you can help? I earn 50k aged 28 with 7 years NHS pension contributions. Under the scheme, I am paying Where does my employer contributions come in to this? How is this worth me remaining in the scheme. Each year you add an amount to your pension pot and this amount is inflated annually by the respective indexing factor. By the time you get to retirement, you have 40 years for example of annual amounts in your pot; all of them inflated over the years.

Without it, there is no way the benefits would be what they are. Best wishes Owen. Thank you so much for your response. Sorry if I am being really dense here. The government essentially incentivises individuals to save for their retirement by offering tax relief at their highest notional rate of income tax on pension contributions.

The two are different and this will, in the main, be down to the fact that your taxable pay is lower because of the pension contributions you make. Hi i am a 23yr old nurse and have been paying into the nhs pension scheme. I am thinking of opting out my pension because i do not like the idea of working till 68 years of age before i can take any payment from my pension otherwise if i take it earlier i will be penalised.

I do not wish to work till i am 68yrs old and worry this age will increase when i come to retirement age. Also if i do wish to reduce my hours from full time to part time as i get older it is my understanding this will also affect what pension i get each month? Also do you ever really get back what you pay in for example if i retire at 68 and im currently 23 i will have paid in 47yrs worth of payments into my scheme?

Any help is appreciated! Your employer is deemed to contribute It is the combination of this contribution and your own which results in the impressive pension benefits that the NHS provides. You receive tax relief on your pension contribution.

If you work part-time you still make contributions to the scheme and still build up benefits. Finally, will you get your money back once you arrive at pensionable age? If you were to assume that you stayed in your current role for the rest of your career and multiplied the contributions above by years and compare that to the likely pension you will receive, then this would confirm that the NHS Pension Scheme is still a great pension scheme!

I need your help. Annual income of 23,, but p60 last year shows 31k total earnings. I am really planning to retire early, maybe How much is my projected lumpsum b. Pension every month c. If the allowable amount is exceeded in any of the three years leading up to retirement or any three years when final pensionable pay is calculated for the purposes of ascertaining benefits then the employer may be liable for a charge. The charge does not apply where benefits are payable as a result of death in service or in deferment.

Home Pay and contracts Pensions Your final pensionable pay As a secondary care doctor in the section of the NHS pension scheme, or who has since transitioned to the scheme, this guidance can help calculate your final pensionable pay. Location: UK. Audience: SAS doctors Consultants. Updated: Friday 30 October What is final pensionable pay? How the best of the last three years is determined. At the end of each scheme year 1 April to 31 March your employer is responsible for notifying the pensions agency of your annual pensionable earnings.

The best year will be used to calculate your pension. Those in the scheme account will need to be had of any break of five years or more as the referencing period will lead up to that.

The last 12 months of service usually produces the highest income of the final three years. If you previously earned a higher income for example from a medical or clinical director post , which finished a year or two before retirement then an earlier year may be better.

If your pay changed during three years your final pensionable pay will be a composite figure. If you receive a backdated increment. If you have more than one job. An example of this is as follows:.

You will need to register through the site and request an activation code to be able to view your personal statement. They run alongside your pension scheme, and are taken from your pay at the same time. An AVC is one of the options open to you to potentially increase your retirement benefits. Your scheme also provides a number of other options for increasing your NHS pension benefits.

For more information please visit www. It is generally not possible to give up your pension in its entirety in return for a one off lump sum payment. More information. If your employment contract is terminated on the grounds of medical capability you may be able to draw your pension without any early retirement reduction applying for early payment, irrespective of your age. You may also be able to get an enhancement to your pension if you are unable to undertake any regular employment.

More information on the eligibility and entitlement conditions. There are three potential options within the scheme for boosting your pension position.

The appropriateness of each option will depend on what exactly you are trying to achieve. View more information. If you are a member of the scheme you will receive a tax-free cash sum of three times your annual pension value and you can still claim more tax-free cash up to a maximum limit should you choose to.

If you are a member of the or schemes you can only claim a tax-free cash sum by commuting some of your pension. Your Annual Benefit Statement will tell you the maximum amount of tax-free cash that you can claim and what this would reduce your annual pension to. You should have online access to an Annual Benefit Statement ABS where you can log-in and check the value of your pension when you want to.

You can view this through Electronic Staff Records if you have access to this, or irrespective by registering through the ABS online portal. You need to ask your employer for an AW8 Form and complete the parts you are required to before returning to your employer.

You do not need to complete this Form if you wish for the lump sum to be paid to your spouse or civil partner. If you draw your pension before your Normal Pension Age, the amount you have earned at that point will be subject to a reduction to reflect the fact that you will be receiving it for longer.

The exact reduction will depend upon which scheme you are in. You can view these reduction factors here. Following a number of falls in this rate which has driven up employer costs the Government is asking whether the current methodology is appropriate.

This consultation was launched following Government concerns that the Cost Cap mechanism for controlling public service pension scheme costs is not working as intended. Our response on behalf of our health care membership to the Treasury consultation on changes to the transitional arrangements to the public service pension schemes.

The information contained within this article is not a complete or final statement of the law and is based on the laws of England, Wales, Scotland and Northern Ireland. While UNISON has sought to ensure that the information is accurate and up to date, it is not responsible and will not be held liable for any inaccuracies and their consequences, including any loss arising from relying on this information.

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