NHS Pension Choice - 1995 or 2008 section

LTA

Hi there,

Anyone out there properly clued up about the NHS Pension Changes.

I am in my 30's working within the NHS (not a Dr/Nurse etc) and am currently in the 1995 section but am being offered the chance to move to the 2008 section.

In the 1995 section the NRA is 60. There is a half final-salary pension after 40 years, based on an annual accrual rate of 1/80th per year, plus an automatic lump sum of 3/80ths.

In the 2008 section the NRA is 65, but accrual is at a faster rate of 1/60th per year, though there is no automatic lump sum.

in the 1995 scheme, your pension is based on the best pay that you received!in any one of the three years before retirement.

In 2008, it is the annual average of the best three consecutive years pay in the last ten years, re-valued by the increase in the!Retail Prices Index (known as Reckonable Pay).

From what I can see I'm best staying put due to the NRA, any thoughts?

financialdoll

hi

Hopefully you have received a personalised projection comparing the 1995 scheme v the 2008 Scheme and the difference if you retire at 60 or 65?? if you look at this, it should be fairly clear what is the best route if you remain working.

I have looked at a couple for clients and it was compellling to stay in the 1995 Scheme.

I think there is a difference though if you had to retire through ill health but there is no projection of what the difference in income would be.

snowcat53

I was in the 1995 scheme, left and moved it all into another public sector scheme, and have now rejoined the NHS in the 2008 scheme, so I never had to go through this choice exercise. Both schemes are good though but there will be another (worse) version coming in - as already announced

It's tricky working out but main factors
1) whether you think you will want/need to go on working to 65 or want to go at 60 ;
2) how your career will develop - higher pay at the end or plateauing 10 or more years before

You could try doing a spreadsheet with various scenarios and see what each scheme would pay you. It is possible to commute 2008 pension into a lump sum (giving up £1000 pension gives 12000 lump sum i think) so you can compare benefits more like for like, if you assume you would take the same lump sum from each scheme.

Remember also you can retire at 60 under the 2008 scheme but benefits are reduced by a known %ge because you are getting them for longer

The 2 schemes also differ in other benefits - eg redundancy/early retirement - so look into those too.

Good luck

LTA

Well not surprisingly I'd like to think I wouldn't still be working at 65 but who knows.

Yep need to have a proper look at the projections.

At first glance, it looks like it would make sense to stay in the 1995 section based on the NRA and what I envisage my plans to be at this time.

As the last post said, I suspect I will have to make a few more choices about whether to stay or move into different sections in the next few years too.

Thanks, it is good to hear some other view points on the changes.

Koicarp

I'm a nurse in the '95 section, I haven't had my choice yet, but having had a good read through the two sections I can't think of any reason why I would change. For me the possibility of earlier retirement is very important as neither of my parents has survived 'til normal retirement age.

kidmugsy

If you can make the swap at any time you like, I suggest you sit tight until a compelling reason appears.

moggitymog

going into the 2008 section is a one time offer, there will not be another opportunity.
I am in the 1995 section and plan to stay there as I can still work to what age I chose but have the option to retire earlier.

LTA

Yeah I think 1995 is the way to go. It's a long way to retirement and the pension arrangements will no doubt change a few times before then!

Keegan

Hi all,

I was wondering if anyone could offer me some advice as this pension stuff really confuses me. I am a 29 year old psychologist and I am in the 1995 pension scheme. Like others I have been offered the chance to move to 2008. I originally thought it would be beneficial to stay in the 1995. However, after much consideration I am wondering if I am better in the 1995.
My quires are

• I have not had children yet and when I choose to do so I will want to work part time for a few years. Therefore my contributions to my pension will drop. I started in the NHS around 6 years ago and started on £12,000. I now have the potential to earn about £50,000. I will hopefully achieve this in my 40s and hope to stay on this wage until I take retirement. If I understand correctly this would favour the 1995 scheme, as they will not take an average earnings at the end.
• I must admit I do enjoy my work and I can’t see myself retiring at 60. I believe this would favour 2008, as I will work longer and therefore could have a better pension.
• I am very unsure about the lump sum and this is not really impacting on my decision.
• I will possibly be entitled to the special class status as I plan to work in mental health services for the duration of my career.

It is so hard to make these decisions now when I am so young and I don’t know what the future holds. Does anyone have any advice?
Thank you