NHS Pension worth it?

dunstonh

Old_Slaphead wrote: »

Seems a bit steep!

To pay a pension of around £17k at 65 would require a pension fund of around £300k ??

Contribs of £1908pm over 35 years, excluding growth & inflation, should achieve substantially more (£1908 x 12 x 35 = £800k)

Remember that the NHS scheme is guaranteed. So, you have to use rates of return that reflect that (i.e. cash). Then deduct inflation (which basically gives you a zero growth rate.

You have to use an annuity rate that is indexed and includes spouse income to match the NHS scheme.

And finally you have to look at inflation over 30 years and pay rises.

To get a pension of £16,625 in todays terms on the above basis would cost £1141pm However, the NHS scheme wouldnt pay £16,625 it would pay 43.75% of the final pensionable salary (something like best 3 consecutive years in the last 10 or similar)

Andy_L

dunstonh wrote: »

Remember that the NHS scheme is guaranteed. So, you have to use rates of return that reflect that (i.e. cash). Then deduct inflation (which basically gives you a zero growth rate.

You have to use an annuity rate that is indexed and includes spouse income to match the NHS scheme.

Sort of guaranteed - depends how the legal action over the change to CPI from RPI indexation indexation goes.

Old_Slaphead

dunstonh wrote: »

Remember that the NHS scheme is guaranteed. So, you have to use rates of return that reflect that (i.e. cash). Then deduct inflation (which basically gives you a zero growth rate.

You have to use an annuity rate that is indexed and includes spouse income to match the NHS scheme.

And finally you have to look at inflation over 30 years and pay rises.

To get a pension of £16,625 in todays terms on the above basis would cost £1141pm However, the NHS scheme wouldnt pay £16,625 it would pay 43.75% of the final pensionable salary (something like best 3 consecutive years in the last 10 or similar)

So what you're saying is that to get like-for-like pension, a non-final salary scheme member needs to pay in around 60% of his/her salary (still seems a bit steep given that perceived wisdom is closer to 30% - see recent PWC findings).

Anybody now deny that these are not 'gold-plated' schemes ?

bendix

I think it's fair to say that I absolutely despise the NHS.

dunstonh

Old_Slaphead wrote: »

So what you're saying is that to get like-for-like pension, a non-final salary scheme member needs to pay in around 60% of his/her salary (still seems a bit steep given that perceived wisdom is closer to 30% - see recent PWC findings).

Anybody now deny that these are not 'gold-plated' schemes ?

If you want to use cash savings (such as cash ISA) to replace the NHS scheme then yes, it is that high.

If you want to use personal pensions and accept investment risk with an average growth rate of 7% p.a. (with 1% AMC deducted from that) then that falls to £725pm. That falls closer to the 30% figure you mention. However, you wont find anyone willing to set up a personal pension for an opt out.

Sort of guaranteed - depends how the legal action over the change to CPI from RPI indexation indexation goes.

It tarnishes the gold plating a little but it still makes it a damned fine scheme.

bendix

dunstonh wrote: »

It tarnishes the gold plating a little but it still makes it a damned fine scheme.

Not for the poor schucks who pay for it - the taxpayer.

geoffgeofftygeoff

I'd be happy for them to have this scheme providing they are happy to pay for it themselves. I don't want to pay for other people's company pensions, there is no reason for me to do that. The state pension can stay though - it's crap enough to just about sustain a miserable existence.

The blindingly obvious solution to this epic mess is to change everyone over to defined contribution schemes. It will help focus minds toward the issue of whether actually putting in any effort yourself to support your own retirement is important.

Get the motorbike, save me some money. That's my vote.

getmore4less

It is one benifits that helps many NHS workers tolerate the low pay.

geoffgeofftygeoff

Easy to say when someone else is paying but the same issue exists across the whole population.

mysparrow

geoffgeofftygeoff wrote: »

I'd be happy for them to have this scheme providing they are happy to pay for it themselves. I don't want to pay for other people's company pensions, there is no reason for me to do that. The state pension can stay though - it's crap enough to just about sustain a miserable existence.

The blindingly obvious solution to this epic mess is to change everyone over to defined contribution schemes. It will help focus minds toward the issue of whether actually putting in any effort yourself to support your own retirement is important.

Get the motorbike, save me some money. That's my vote.

The NHS pension pot does contribute to the treasury not the other way round. We do pay for it ourselves & give back. This contribution is also set to increase with the proposed reforms.

Perhaps other pensions should match this one rather then the childish behaviour of 'it's not fair so let's destroy it'.