Future gazing for NHS pension or Transfer to Local Gov Schem

[thepeoplespal]

I've 7 odd years of 2008 NHS Pension (unfunded) and I'm about to start a Local Government pension which I believe is funded and invested in the stock market etc. When I was setting up the Local Gov Pension for my new job, the admin person mentioned that there was an opportunity to transfer my NHS Pension to the local Government Scheme. I don't know if this is wise or not.

Obviously I need to speak to an expert, but if I don't know what the possibilities are I can't ask the questions or think through the scenarios I could be facing, like:

1. NHS Pension imploding and Gov lopping off 20% vs. Funded Local Gov. (crystallising value)
2. In death benefits - maximising pension to my wife & family
3. Early retirement or ill health differences between schemes.
4. Would transferring have an effect if I was to re-enter the NHS on a lower paid job.

So should I bumble along & do nothing, or should I consider a transfer? Open to your thoughts.

[rossub]

As someone in the NHS and with an NHS pension, I would leave it and do nothing. The government will not (possibly cannot legally) take away your accumulated benefits over those 7 years. If the government fails to meet its obligations to NHS pensioners, then there will be far bigger issues that the country is facing - like a major war!

It’s as guaranteed a pension as you’ll get anywhere, so nice to be able to rely on. Only thing to watch is when you can expect to start being paid it. Not sure if that’s variable on the 2008 scheme, like it is on the 2015 scheme or not - it was age 65.

[p1doc]

if on 2008 scheme payout at 65 or reduced benefits 5%per year to earliest age 60 not including ill health retirement no lump sum so just annuity but probably worth keeping

[thepeoplespal]

So 2008 scheme pays out a minimum of 2 years earlier than 2015 which is likely to increase as pensionable age increases too. That's worth preserving.

I may be pessimistic but I personally, don't think that the NHS pensions will be sustainable if they remain unfunded with our contributions going into paying pensioners & general taxation, as I think we will be in the same boat as the pensioners in Greece. There is a surplus of contributions now, but I can't see the taxpayer picking up the tab when so many pensions schemes are failing.

[sidicks]

thepeoplespal said:

So 2008 scheme pays out a minimum of 2 years earlier than 2015 which is likely to increase as pensionable age increases too. That's worth preserving.

I may be pessimistic but I personally, don't think that the NHS pensions will be sustainable if they remain unfunded with our contributions going into paying pensioners & general taxation, as I think we will be in the same boat as the pensioners in Greece. There is a surplus of contributions now, but I can't see the taxpayer picking up the tab when so many pensions schemes are failing.

The sustainability of a pension scheme is fundamentally driven by the cost of providing the benefits, which is broadly independent of whether it is a funded or unfunded scheme.

[rossub]

That's not really how it works though. The government has to pay those obligations, whether the contributions of those in work exceeds the pensions given out or not. If they alter the pension scheme again to reduce future obligations, they will only do this by increasing future contributions or increasing the retirement ages of future schemes. They will not reduce the benefits accrued in previous years under previous schemes (1995 & 2008)- can you actually imagine the uproar if that happened. It'd be political suicide, because we could have looked at alternative options for retirement if we had known that our benefits were going to be stripped away like that in future. Won't happen.

[sidicks]

rossub said:

That's not really how it works though. The government has to pay those obligations, whether the contributions of those in work exceeds the pensions given out or not. If they alter the pension scheme again to reduce future obligations, they will only do this by increasing future contributions or increasing the retirement ages of future schemes. They will not reduce the benefits accrued in previous years under previous schemes (1995 & 2008)- can you actually imagine the uproar if that happened. It'd be political suicide, because we could have looked at alternative options for retirement if we had known that our benefits were going to be stripped away like that in future. Won't happen.

I assume you’re replying to the previous post, rather than mine?!

I agree that the accrued benefits are unlikely to be materially changed, but retrospective changes have been made to private DB schemes, so no justification why the same approach could not apply to public DB.

I agree that retaining the benefits in the existing scheme probably makes sense, subject to personal circumstances!

[rossub]

Yes - yours appeared after I posted mine, as it took a while to write

[sidicks]

rossub said:

Yes - yours appeared after I posted mine, as it took a while to write