Additional payments into NHS or private

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louloubelle79
louloubelle79 Posts: 411 Forumite
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in Pensions, annuities & retirement planning
Hello
Can anyone advise? Have NHS pension started last year (age 37) work part time so minimal in there. Have 3 other small pension pots from previous employers.

Would I be better paying into additional payments in NHS scheme (2015) or setting up private pension? My NHS retirement age is 65.

Thank you
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  • quotememiserable
    quotememiserable Posts: 590 Forumite
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    It doesn't make a lot of difference. You can't put extra money into the NHS defined benefit side, you buy into their Additional Volutary Contribution pot, which is more or less the same as a private pension. Would you select your own investments, or just go with the default fund? If you'd go default you may as well keep it simple and go NHS.
  • Andy_L
    Andy_L Posts: 12,792 Forumite
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    quotememiserable wrote: »
    It doesn't make a lot of difference. You can't put extra money into the NHS defined benefit side, you buy into their Additional Volutary Contribution pot, which is more or less the same as a private pension.

    you can still buy additional pension instead of AVCs. You can't buy "extra years" like you could in the old schemes

    "You can buy any amount in units of £250 annual pension up to a maximum total purchase
    of:
     £5,000 annual pension if you are a member of the 1995/2008 Scheme
     £6,500 annual pension if you are a member of the 2015 Scheme,"

    https://www.nhsbsa.nhs.uk/sites/default/files/2017-02/Additional%20Pension%20%2802.2017%29%20V4.pdf
  • claire111
    claire111 Posts: 285 Forumite
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    "you buy into their Additional Volutary Contribution pot, which is more or less the same as a private pension"

    Just plain wrong.

    Purchase of 'NHS Additional Pension' is similar to purchase of a Retirement Annuity and for many people is astonishingly good value and should be investigated and considered as part of their pension plan by anyone employed by the NHS, or anyone married to anyone employed by the NHS.
  • xylophone
    xylophone Posts: 44,413 Forumite
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    https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension

    Additional Pension is not the same as AVC.
  • louloubelle79
    louloubelle79 Posts: 411 Forumite
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    Thank you I have purchased another £6500 of additional pension and set up AVC pot with Prudential. Hoping to catch with not paying in enough past 20 years !!
  • justme111
    justme111 Posts: 3,508 Forumite
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    ha. I believe most of us have not paid in enough in 20 years from 17 to 37.
    How much did it cost to buy those 6500 if you dont mind me asking?
    The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
    Often people seem to use this word mistakenly where "quandary" would fit better.
  • louloubelle79
    louloubelle79 Posts: 411 Forumite
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    Hi I pay £343 a month pre tax out of salary.
  • louloubelle79
    louloubelle79 Posts: 411 Forumite
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    That's the max you can purchase you can obviously purchase less in values of £250 I believe.
  • hugheskevi
    hugheskevi Posts: 3,855 Forumite
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    Would I be better paying into additional payments in NHS scheme (2015) or setting up private pension? My NHS retirement age is 65.

    Your Normal Pension age is linked to State Pension age - which will be at least age 68 for you.
  • justme111
    justme111 Posts: 3,508 Forumite
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    I do not see it as a good value ..
    please correct me if I am wrong- 343×12 ×30 (years you have till retirement) =
    £ 123000. Interest on it assuming 4% growth would be ( £12300÷2)×0.04×30=£72000 giving in total about 200 k if invested assuming 4%growth. If you taken 4 % annually of it you would have about 8 k and that is leaving capital untouched.
    Ok you would save on NI as well and you might preferred no investment risk but in my mind the benefit of it is outweight by freedom to take it earlier if you wanted to and the capital left behind ( or far higher yearly money if you prefer to drawdown capital).
    The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
    Often people seem to use this word mistakenly where "quandary" would fit better.
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