Short Term, Long Term?

seven-day-weekend

My son's girlfriend is hoping to change her job (cleaning) to the same job working with the NHS for slightly less hours. We have encouraged her to apply for this as she will be eligible to join the NHS Pension Scheme, one of the best in the country.

I was telling a friend of mine this yesterday (she is a cleaner too) and she said 'Oh they only pay minimum wage, that's why I went freelance, I can get more money working for myself.'

Now she may be freelance, but does not now pay into ANY Pension Scheme at all, therefore not building up any Pension other than her State Pension (and I'm not even sure about that, tbh).

I think this is two different ways of looking at things. Short-term over long-term.

I hasten to add my friend and her husband have had to bring up five children, so she may have just needed the money in her pocket at the time.

However, I do think it is a slightly short-sighted way of looking at things.

What would you do - would you take lower pay now to have a decent pension later? Short term pain for long term gain?

Biggles

As a longtime proponent of the NHS Pension Scheme and of long-termism, three thoughts come to mind.

The first is that not many domestic staff in the NHS (as opposed to admin, nursing, medical etc) stay full the course to retirement, partly due, no doubt, to the fact that they are generally part-time and it's less of a 'career'. So the long-term gains are more marginal, especially as she has apparently got this far with no pension provision.

The second, of course, bearing in mind the current climate, is that this job may be privatised in the near future and either no longer exist or exist under different terms, eg without pension provision.

The third, and major point, is that, to be practical, it would depend on the difference in pay that we are talking about here; in theory, if you are paid significantly more, you could purchase your own personal pension and still be ahead of the game. And you could then take it with you if you moved (or were moved) to private employment at some future stage.

seven-day-weekend

Biggles wrote: »

As a longtime proponent of the NHS Pension Scheme and of long-termism, three thoughts come to mind.

The first is that not many domestic staff in the NHS (as opposed to admin, nursing, medical etc) stay full the course to retirement, partly due, no doubt, to the fact that they are generally part-time and it's less of a 'career'. So the long-term gains are more marginal, especially as she has apparently got this far with no pension provision.

The second, of course, bearing in mind the current climate, is that this job may be privatised in the near future and either no longer exist or exist under different terms, eg without pension provision.

The third, and major point, is that, to be practical, it would depend on the difference in pay that we are talking about here; in theory, if you are paid significantly more, you could purchase your own personal pension and still be ahead of the game. And you could then take it with you if you moved (or were moved) to private employment at some future stage.

Thank you Biggles and I agree with most of your points.

My friend HAS however stayed doing cleaning, so she would (imho) have been better staying with the NHS.

My son's girlfriend is only 23, so it is going to be at least 45 years before she reaches retirement age. Nevertheless I still think it would be worth doing the job for the Pension for the time she would be employed by them, however long that may be. If she leaves the NHS her Pension would be there waiting for her, index-linked, when she finally retires.

Mollina_Girl

Hi SDW,

I agree with all the points Biggles has made but would add one further point.

Are you aware that the NHS pension scheme is under review at the moment with decisions to be made in the spring of next year. It is thought that employee contributions will rise and the current nhs retirement date will also rise.

monkeyspanner

Looking back I would have gone for the NHS pension as it was a generous defined benefit scheme and probably worth more than the decrease in wages. However, looking forward I rather doubt there is any long term prospect of the government continuing with these final salary schemes as they will become impossible to fund due to increased life expectancy.

The only contrary argument I can think of would be that there is a good chance life expectancy will start to fall due to the current life style choices. However the illness associated with these lifestyles will bankrupt the NHS so there will not be any ability to pay generous pensions.

Savvy_Sue

I don't know what I'd do: from your other posts about your son's g/f she may find it easier to be employed than to go freelance! clearer boundaries, no need to 'sell' herself on a regular basis etc.

However, your friend could have - and still could - set up her own stakeholder pension, these days I don't even think you have to be working to pay into your own pension pot, and I'd strongly recommend that!

seven-day-weekend

Yes Savvy Sue, I think she will be better employed as well.

As for my friend, I don't think there is any way she will pay into a pension

Primrose

I think you son's girlfriend is to be congratulated that she's thinking about her pension prospects at such a young age. The harsh reality of pension planning now is that if you don't do this and make provision accordingly, you run a high risk of suffering an impoverished old age.
It's right that membership of the the NHS pension scheme is now going to be at risk for many lower paid workers whose jobs could be transferred to the private sector so there's no guarantee that she will have a lifetime of index linked pension prospects ahead of her.
If she's a cautious individual she may decide that she'll go the NHS route and at least try to build up some entitlement of index linked pension while she still has the opportunity. As somebody else has said, it will still be there waiting for her in 45 years time when she's ready to retire. But do caution her, if she ever leaves, to make sure that she keeps all her pension payment records and pay slips in perpetuity.! Knowing how inefficient government computers and records are, in 45 years' time, being able to produce her pay slips and annual pension payments may be the only proof that she has that ever paid into the scheme.

seven-day-weekend

Thanks all for your replies. Unfortunately she did not get the job. But she is still in work, so no rush, and will keep looking.