Nhs pension v private

natsnannie

Newbie - Following a lengthy debate with a friend, he has advised me to get out of NHS superannuation pension fast and get a private one - I'm confused as I have always thought NHS would be better!!! Can anyone give me true advice?

mitchaa

NHS is a final salary pension giving you upto 3/4 of your annual salary. (45yrs service)

That is going to be very very difficult to beat.

natsnannie

Thanks very much Mitchaa for your speedy reply - I will take on board and leave as is.

dunstonh

Following a lengthy debate with a friend, he has advised me to get out of NHS superannuation pension fast and get a private one

Your friend is stupid. Sorry, no other way of putting it.

Your probably wouldnt find a provider willing to do it though thankfully.

Can anyone give me true advice?

An IFA can. However, in this case its very clear that your friend hasnt a clue.

davjan

Depending on your job / salary level, you'll be paying something like 5% to 6.5% of your pensionable earnings, but this will also reduce your tax / national insurance payments. On top of this, you employer will be paying 14% of pensionable earnings into your fund. There's also the life insurance cover of twice your salary to be taken into account. Sorry, but your "friend" is talking out of a hole in the proverbial - no contest - stay with the NHS Pension Scheme.

Starrystarrynight

I worked for a few months in a council's superannuation section and it was a few years ago now, but one thing I do remember the more experienced staff telling me is that a private pension would never beat an occupational one.

natsnannie

Dear All thanks very much for confirming my thoughts - I will take great delight in conveying your very helpful advice to my friend!

marklv

mitchaa wrote: »

NHS is a final salary pension giving you upto 3/4 of your annual salary. (45yrs service)

That is going to be very very difficult to beat.

Not quite correct.

The extract below is taken from the official website: http://www.nhspa.gov.uk/PDweb/PensionCalculators/StandardPension/index.htm

"When you retire from the NHS Pension Scheme (Amended 1 April 2008) you will get a pension and tax free lump sum. Your annual pension will be 1/80 of the best of your last 3 years pensionable pay for each year of Scheme membership. Part years of membership will also count towards your pension. This will usually be paid for the rest of your life. Your lump sum will normally be 3 times your yearly pension, but married men with membership before 25.3.72 may get a smaller lump sum. "

mitchaa

marklv wrote: »

Not quite correct.

The extract below is taken from the official website: http://www.nhspa.gov.uk/PDweb/PensionCalculators/StandardPension/index.htm

"When you retire from the NHS Pension Scheme (Amended 1 April 2008) you will get a pension and tax free lump sum. Your annual pension will be 1/80 of the best of your last 3 years pensionable pay for each year of Scheme membership. Part years of membership will also count towards your pension. This will usually be paid for the rest of your life. Your lump sum will normally be 3 times your yearly pension, but married men with membership before 25.3.72 may get a smaller lump sum. "

Your information relates to the old scheme. (Post April 2008 = New. Pre April 2008 = Old, with option to transfer)

Old pension scheme = 45/80max and 3x pension lump sum
New pension scheme = 45/60max with no lump sum.

56.25% FSP vs 75% FSP

Andy_L

Unless you're in the current scheme which is a 1/60ths, no lump-sum scheme (except by commutation)

DavidLaGuardia

Interestingly I think that the pension from the new 60th scheme will be exactally the same as the old 80th scheme if a lump sum is taken. However, the lump sum may not be 3x the residual pension, based on it representing 25% of the available fund I would imagine it would be better than 3x the pension left, or at least it should be!

EDIT
I am wrong on the lump sum computation above, just checked online.
it seems that the HMRC calculation for lump sum is 30 x pension before lump sum divided by 7 to nearest figure divisable by 12
The price of the lump sum is £1 pension for every £12 lump sum. considering the pension is index linked and in comparrison with annuities this makes takeing a lump sum relatively expensive.