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Pulse

Original Poster:

9,727 posts

102 months

[news] 
Thursday 4th October 2012 quote quote all
I'm looking for some advice from those with an NHS Pension, or those that understand it well.

From what I understand, the net cost of the pension is currently c.£165 per month (after tax savings).

I am wondering now, especially with the changes due (it will keep increasing and will change to average salary), whether my money may be better elsewhere.

I'm not entirely sure of the benefits/negatives of sticking with it or stopping it, so I'd really appreciate some advice.

Rollin

3,085 posts

129 months

[news] 
Thursday 4th October 2012 quote quote all
If you are looking to put the money into a different pension, I doubt you will find one that's better.
If you think you can invest the £165 and achieve better returns (property,shares etc.) then have a go smile
The other option is to spend the money and hope you don't live beyond retirement age. smile

I'm in my forties and I am under no illusion that the age I get my NHS pension will be before 75.

Pulse

Original Poster:

9,727 posts

102 months

[news] 
Thursday 4th October 2012 quote quote all
Rollin said:
If you are looking to put the money into a different pension, I doubt you will find one that's better.
If you think you can invest the £165 and achieve better returns (property,shares etc.) then have a go smile
The other option is to spend the money and hope you don't live beyond retirement age. smile

I'm in my forties and I am under no illusion that the age I get my NHS pension will be before 75.
That I think is my concern. I'm 28, and we can't say for sure that there will even be any money there when I get to 75, 80, 85, or whenever it will be.

I'm thinking £165 overpayment into the mortgage each month could make more sense than paying into a pension. I'm not sure though, as I've never really thought about it before. When I joined the NHS, I was told 'you'd be a fool to leave it', so I never have. Basically... Is this still the case?

The Leaper

2,000 posts

90 months

[news] 
Thursday 4th October 2012 quote quote all
Let me try and help from my perspective.

I'm retired now after 40+ years as a pension consultant advising companies on all aspects of company sponsored pension plans. During this period I dealt with 100s of companies, mostly UK subsidiaries of USA parent companies, and met 1000s of employees to discuss their personal aspirations in their future. Usually, because of the time I was working, the pension schemes were of the final salary type. In addition, I have been an advisor for The Pensions Advisory Service(TPAS)since 1991 dealing with pension scheme members' problems and individual formal complaints. TPAS is a quango so 100% of their work and advice is free to whoever seeks it. I'm not employed so I give my time to TPAS for free. I'm a pensioner after being in good quality final salary schemes all my working life. This means I'm in a reasonably good place and I can provide my views, particularly to those younger aged, regarding their pension decisions.

Generally speaking, my view is that if anyone has access to a final salary scheme they should participate, no hesitation. The cost to you plus the company contribution and all the benefits is too good to miss. You may think you can replicate them yourself but you'd be seriously pushed to do so. It is easy to be sidelined into doing alternative other things with the equivalent of your contributions...such as paying extra amounts towards a mortgage as you indicate....investing in property, whatever. The thing is that all these have their own risks. The really important thing is to make provision for income in your later years from as early a date as possible. It's just too easy to postpone the decision in favour of nice "NOW" things like holidays, new car, new house, etc. Children have a priority too. However, sooner or later, pension provision will arise and you'll need to do something and the later you start the harder it is to accumulate sufficient resources. So often I've seen people leave things far too late and their expectations are beyond them financially, such a shame.

Your in the NHS Pension Scheme, which is possiby in the top 10% of excellent UK final salary schemes. It's easy for me to say, but in my view you'd be pushed to spend your money more wisely. The only real risk is the political one: successive governments will find it increasingly difficult to expect UK tax payers to finance super pensions for public sector employees. Public sector employees think they are underpaid by comparison to the private sector and deserve better pensions. The pay issue is myth: generally, public sector employees are paid better than they realise but their unions make sure they don't know that for the sake of the union's publicity etc.

Via TPAS I have a good understanding of the regulations that govern the NHS Pension Scheme, as well as its good points and where it sometimes fails, particularly on the administration/management side, but overall it's fine.

So, stick with it would be my view. This is not my advice because I cannot give advice, of course.

Maybe my views will be challnged by certain "anticipated PHers" whose view are contrary to mine, which I respect, but at least I'll stick with mine! Easy do do so in my reasonable situation!

R.


Pulse

Original Poster:

9,727 posts

102 months

[news] 
Thursday 4th October 2012 quote quote all
Thanks for that. I appreciate it.

My problem is that it was very good. It's now getting more expensive per month (£30 more per month for me), and it's then going to change to 'average salary'. When this happens, would your view change?
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sidicks

5,347 posts

105 months

[news] 
Thursday 4th October 2012 quote quote all
Pulse said:
Thanks for that. I appreciate it.

My problem is that it was very good. It's now getting more expensive per month (£30 more per month for me), and it's then going to change to 'average salary'. When this happens, would your view change?
Put simply, previously you were getting a benefit worth about 3 or 4 times what you paid in. Under the new terms your benefit will be 2.5 to 3 times what you pay in.

Still sounds good to me - I'd swap!!

smile
Sidicks


Pulse

Original Poster:

9,727 posts

102 months

[news] 
Thursday 4th October 2012 quote quote all
But... In the event I sit on, let's just say, £30,000 for most of my career, then jump to £60,000 (extreme, but just as an example), this means I'll actually get a lot less, doesn't it?

sidicks

5,347 posts

105 months

[news] 
Thursday 4th October 2012 quote quote all
Pulse said:
But... In the event I sit on, let's just say, £30,000 for most of my career, then jump to £60,000 (extreme, but just as an example), this means I'll actually get a lot less, doesn't it?
Is that likely??

Maybe you'll only get 2 to 2.5 times what your own contributions would have funded - isn't that still pretty amazing?!

The Leaper

2,000 posts

90 months

[news] 
Thursday 4th October 2012 quote quote all
Pulse,

The intended change to average salary is already causing enquiries to TPAS indicating there's a lot of concern among the NHS Scheme membership...no real surprise there. Of course, it is not as good as a final salary plan, but I still think it's better than a typical personal pension, or no pension scheme. The change will be for the future not the past so accrued benefits will be OK.

Average salary schemes were the norm when I was a lad starting out in my career. They became unattractive due to UK inflation in the '60s so final salary became the answer. Of course, full employment at that time and throughg to the early 00s meant that employers needed to be competitive in the labour market, a bit different to today.

R.

Pulse

Original Poster:

9,727 posts

102 months

[news] 
Friday 5th October 2012 quote quote all
sidicks said:
Pulse said:
But... In the event I sit on, let's just say, £30,000 for most of my career, then jump to £60,000 (extreme, but just as an example), this means I'll actually get a lot less, doesn't it?
Is that likely??

Maybe you'll only get 2 to 2.5 times what your own contributions would have funded - isn't that still pretty amazing?!
I can hope! hehe

It's quite likely that I will continue to go up, which means over my career I will be getting less; but I see what you're both saying - I'll stick with it! I'm only 28, and have paid in for 4 years now.

JPJPJP

2,568 posts

52 months

[news] 
Friday 5th October 2012 quote quote all
If you can outperform that scheme then you should quit your job today and start a hedge fund Monday

People would queue to invest

MEC

2,272 posts

157 months

[news] 
Saturday 6th October 2012 quote quote all
is it average over the whole work term or just the last 10 years? I thought the latter?

Also consider the pension contribution is not taxed so the actual cost to you is more like £120 per month.

Pulse

Original Poster:

9,727 posts

102 months

[news] 
Saturday 6th October 2012 quote quote all
MEC said:
is it average over the whole work term or just the last 10 years? I thought the latter?

Also consider the pension contribution is not taxed so the actual cost to you is more like £120 per month.
That's net though. Gross is more like £220 or something like that.

996c2

371 posts

49 months

[news] 
Saturday 6th October 2012 quote quote all
Pulse said:
I can hope! hehe

It's quite likely that I will continue to go up, which means over my career I will be getting less; but I see what you're both saying - I'll stick with it! I'm only 28, and have paid in for 4 years now.
I am glad to hear you're sticking with it.

Your NHS employer is currently having to contribute (over and above what they pay you) 14% of your salary towards your pension so you would have to be crazy to leave!

As a GP principle I am having to pay both the employee and employer contribution (almost 25% of my pay) towards the NHS pension scheme and I have not quit the scheme yet.

sidicks

5,347 posts

105 months

[news] 
Saturday 6th October 2012 quote quote all
996c2 said:
I am glad to hear you're sticking with it.

Your NHS employer is currently having to contribute (over and above what they pay you) 14% of your salary towards your pension so you would have to be crazy to leave!

As a GP principle I am having to pay both the employee and employer contribution (almost 25% of my pay) towards the NHS pension scheme and I have not quit the scheme yet.
Yes and no. The notional employer contribution (based on out-of-date economic assumptions etc) is 14%. The actual cost to the employer (and hence taxpayer) is more like 28%, and this is the relevant figure!

Sidicks

Pulse

Original Poster:

9,727 posts

102 months

[news] 
Saturday 6th October 2012 quote quote all
It just goes to show that I know nothing about pensions! hehe

Is there any (simple) way to calculate what I get back, and when? I'm in the 2008 scheme, so I believe I don't get the initial lump sum.

p1doc

1,939 posts

68 months

[news] 
Saturday 6th October 2012 quote quote all
after meeting with bma they reckon 30%is cut off for whether NHS pension outperforms other pensions but still has death in service which a lot of pensions do not adequeately provide for
2008 scheme is not as good as 1995 scheme but you are unable to change schemes and means you have to work longer for less benefit
also be aware that roughly every year you retire early you lose 5%overall pension
in 2015 the pension scheme will change again according to mt adviser meaning you will have elements of your pension in 2 different schemes-for you 2008 and 2015 but full details unclear at present
martin

sidicks

5,347 posts

105 months

[news] 
Saturday 6th October 2012 quote quote all
p1doc said:
also be aware that roughly every year you retire early you lose 5%overall pension
Th time for accumulation of contributions is less and the pension will be paid for longer, so 5% reduction seems generous!!


Pulse

Original Poster:

9,727 posts

102 months

[news] 
Saturday 6th October 2012 quote quote all
sidicks said:
p1doc said:
also be aware that roughly every year you retire early you lose 5%overall pension
Th time for accumulation of contributions is less and the pension will be paid for longer, so 5% reduction seems generous!!
That's what I was thinking. I will be happy to retire at 55(?) and not pay into it for a further 10 years.

The Leaper

2,000 posts

90 months

[news] 
Saturday 6th October 2012 quote quote all
Retiring at age 55 will mean that you'll have your pension accrued up that time based on salary and service history etc, less a reduction factor for early payment. The reduction factor will be around 50% ie 5% per year early. You'll get the smaller pension paid for the additional 10 years, of course.

In an earlier post you asked about calculating your future pension. The NHS Pensions Scheme is administered by NHS Pensions and you could ask them for a pension forcast. It is likely to be based on current pay plus past and future service...still, it'll give you a rough idea. I've always found NHS Pensions easy to deal with.

R.
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