NHS early retirement avoiding reduction

`releaseme

Desperate to get out of my Scottish NHS job aged 55 later this year, I am in the 1995 (80'ths) scheme and cannot afford to take the reduction involved by retiring 5 years early on my 20 years service. I had always planned to go at 58 on 23 years service, and take the reduction involved for that. The difference in pension between retiring at 58 or retiring at 55 is around £2,700 at present.

I am trying to get a redundancy or premature retirement package, but failing this I've had a transfer value forecast that would give me a similar income in retirement to my NHS pension taken at age 58, based on a 5.5% return. This does not feel like too bad an option.

I appreciate that taking my pension fund out of the NHS scheme will make it less reliable in that I will lose the guaranteed income and inflationary increases. I will also have to go without the lump sum but I plan to sell my home on which I no longer have a mortgage, investing the proceeds, and to rent long term.

However, I need to find a way to get out at 55 on enough money to survive, hopefully with the flexibility to take a little more at the front end, until my income is boosted by the state pension at age 66 (I will qualify for this). I also like the idea that if i die, my pension fund becomes part of my estate, albeit after tax, whilst the NHS pension just stops. Hopefully I've understood all this properly.

Any comments, suggestions, warnings or recommendations welcome!:A

dunstonh

but failing this I've had a transfer value forecast that would give me a similar income in retirement to my NHS pension taken at age 58,

I cant see that being likely to be honest. At least not on a like for like basis. Especially as a transfer value is effectively reduced as well.

I appreciate that taking my pension fund out of the NHS scheme will make it less reliable in that I will lose the guaranteed income and inflationary increases.

ahh, so not like for like then.

I will also have to go without the lump sum

it just gets worse.

but I plan to sell my home on which I no longer have a mortgage, investing the proceeds, and to rent long term.

Rents increase yet you wont have an increasing income.

I also like the idea that if i die, my pension fund becomes part of my estate, albeit after tax, whilst the NHS pension just stops.

The pension does not become part of your estate. Death benefits will depend very much on the income options you take. Whilst potentially, they could improve, it may well be more cost efficient to take out a whole of life assurance policy with the significantly higher income you get from the NHS plan.

You cant just transfer an NHS pension. You need an IFA to sign off on it. Have you had a conversation with an IFA yet that will do it?

`releaseme

Hi

Yes, I have had an initial talk with an IFA.

Although there is a risk involved compared to the NHS pension inflationary increases, surely a well invested pension fund and a well-invested couple of hundred grand from selling the house have the potential to increase in value over the years?

And it seems to me that a £500 a month rent, for example, would take an awfully long time to use up £200,000 even if that sum were earning no interest at all...plus no having to cover major maintenance costs, flexibility and no re-sale worries. I am NOT convinced by the idea that property is the best investment and see having all my capital tied up in a home while I struggle on a low income as just plain ridiculous.

tirednurse_2

For what its worth I am also planning to retire from the NHS at 55 with reduced pension. I will sell my flat and rent a nice place with a garden. Hopefully the equity from my flat will last a while.

I have contact dermatitis which means every time I work a shift my hands get inflamed and itch like crazy. Doctor says its due to the constant hand washing. (Not OCD - I mean hand washing at work).

I work for an NHS agency which means no sick pay. So, I work a shift, then have a couple of days off to let my hands recover.

I am sick of being skint and think that sometimes we have to look after today and hope for the best in the future.

jem16

`releaseme wrote: »

Although there is a risk involved compared to the NHS pension inflationary increases, surely a well invested pension fund and a well-invested couple of hundred grand from selling the house have the potential to increase in value over the years?

Were you planning on using an annuity if you transferred?

I assume you are not one of the special classes allowed to retire at age 55?

`releaseme

Hi, the whole point is that I am not part of the special classes, so I would have to work until 60 to avoid any reduction. I am looking into drawdown based options rather than an annuity.

mark55man

not a pensions expert, but it feels like you are allowing your keenness to stop working (and god knows we all feel that) to push you down a route that puts your future at greater risk

almost everything I have read suggests you should not pursue the course of action you propose. There are others
* hanging in for a portion of your remaining time so you don't get clobbered so much on the reduction
* can you change job within the NHS if its local conditions that are making you stressed
* can you find other employment

TBH I am surprised some of the pension advisors who kindly post of this forum have not been more critical.

Good luck with whatever you decide - but do not place too much faith in the hands of the investment market to maintain your income

`releaseme

Options are very limited as i live on an island and would not take any job that involved my current employer. However, I suppose it may be worth trying to get another job outside the NHS IF I can leave my NHS pension where it is so that any future pension is based on my last salary within the NHS.......

jem16

`releaseme wrote: »

I am looking into drawdown based options rather than an annuity.

Right.

Personally I wouldn't give up a guaranteed option on the basis of investment returns.

Have you no spouse/partner to take advantage of the pension after death?

CLAPTON

without seeing the figures it all makes little sense

I'm sure there must be more options but without the figures it all impossible to say.

dunstonh

TBH I am surprised some of the pension advisors who kindly post of this forum have not been more critical.

It's only been a couple of hours. Give it time

At the moment (without figures to compare but just basic info), the principle of what the OP wants to do is likely to cost a fortune (in lost money) over the rest of their life. I would like to see a comparison with early commencement with the NHS scheme.