Should I transfer private pension to NHS?

tiptoes27

I am 50 years old and have just started working part time for the NHS and joined their Pension Scheme. I have two small private pensions that I do not contribute to and have not done so for about 20 years. I was not working after I had my children for many years, then only did small part time jobs which did not leave me enough to contribute to the pension. The value of them is about £20,000.I intend staying in the NHS job until retirement and wondered if would be a good idea in general to transfer my private pensions into the NHS Scheme. I have very little knowledge of pensions and may have to get an IFA (although I am worried about the cost) but just wondered if it is idea worth considering. Many thanks

dunstonh

wondered if would be a good idea in general to transfer my private pensions into the NHS Scheme.

There is no generalisation. For some people it may be best to transfer. For others it wont be. It would require some research (such as finding out what the benefits would be if you did and didnt transfer and comparing them as well as different terms).

I know you you hoping for a simple answer but there isnt one.

tiptoes27

How much should I expect to pay for an IFA? I would not want to take any other products, just have my pension looked at. Thanks

EdInvestor

I would suggest you do one thing first.Contact the two original pension providers and ask them if the plans contain Guaranteed Annuity Rates, and if so what are the rates.Some old pensions with these GAR will pay out much more pension income than an ordinary pension fund these days - say a 10% income rather than a 6% income.So there would be less of a gap with the NHS scheme.

If your plans have these then you may feel it is worth sticking with them, because they will give you more flexibility to retire earlier as well, plus death benefits etc.If no GARs then you can check the NHS transfer idea.

tiptoes27

Thanks I will ge the paperwork out and have a look. Been putting off doing anything with them for a long time as I find it all so complicated!!

greenwell9

hi how many like us are out there 1000000 i would say im same age and just as confused good luck.

Anastasia

If you haven't already done so make a call to your personnel dept and ask to speak to someone about pensions. I have found them very helpful. Also the NHS Pensions agency will give you info. They helped me in the past.

http://www.nhsbsa.nhs.uk/pensions

tiptoes27

Thanks I will look into the NHS pensions website it. The personel dept where I work are not very good or very helpful. I have contacted in IFA who has quoted me a fee of almost £1000.00, which I do not have. I will try all the suggestions on here first and then just have to make my own decisions and hope for the best!!.

ankspon

Transfer to NHS,you can't beat there pensions

tiptoes27

Just noticed of of the personal pensions is a 'protected rights investement account' The total fund is £4200. I have a letter from them ( Aviva) saying I need to decide if I want to contract back in to second state pension. Is this relevant if I am going to transfer to the NHS pension?

exil

Not a pensions expert but the 1st stage is to get an estimate from the NHS pension administrators of how many added years you will get for the money you propose to transfer in. Then

- make an estimate of the salary you expect to be getting when you eventually retire (factoring in any promotion or increments you might get)
- calculate the extra pension you might get
(call that pension A)

- estimate how much your fund might be worth when you retire (assume a growth rate of say 7%)
- check what size of annuity this would buy, remembering to choose an index linked annuity (since your NHS pension would be index linked)
Call this pension B

then compare the two

Example

salary currently 30k

retiring in 10 years - expected salary 40k

20k might buy (say) 3 years pension - that is 3/80 of this salary - £1,500 a year

plus a lump sum of £4,500.

Convert the lump sum into pension - probably another £200. So - pension A is £1,700

At 7% growth your £20k pension fund should grow to say £35k in 10 years.
At current rates this might get you an index linked pension of around £1,000.

You can tweak the figures but I would suggest that buying extra NHS pension sounds like a good thing. Disadvantages

- you can only access your NHS pension when you actually retire - and your employers may not let you retire early even if you want to or need to (eg to care for elderly relatives) and therefore your money will still be locked in ... on the other hand you will get access to your pension in the case of redundancy or ill health,
- whereas your own pension is available for drawdown as soon as you reach 55 even if you are still working.

There are a lot of "ifs" and "buts" including your job prospects in the NHS, the level of NHS pay rises (not looking good at present), inflation, investment returns, annuity rates and the future of the NHS pension scheme itself (it's not likely to be made more generous, more likely the reverse, though this shouldn't affect any added years you buy at this time)