NHS pension

MarcoM

Hi,

When joining an NHS pension is it possible to put in a lump sum
to cater for missed years worth of pension contributions?
If yes what is the limit for a lump sum investment?

Thanks

jem16

You can use a lump sum to buy Additional pension. Buying back of years is no longer available.

Additional pension can be bought as a minimum of £250 and a maximum of £5000. The cost to buy this Additional pension varies with your age so you would need to use the calculators available on the website.

http://www.nhsbsa.nhs.uk/Pensions/2660.aspx

MarcoM

jem16 wrote: »

You can use a lump sum to buy Additional pension. Buying back of years is no longer available.

Additional pension can be bought as a minimum of £250 and a maximum of £5000. The cost to buy this Additional pension varies with your age so you would need to use the calculators available on the website.

http://www.nhsbsa.nhs.uk/Pensions/2660.aspx

Thanks. Are those figures per year or per month?
Also can you pay extra for a year and then stop doing so?

jem16

MarcoM wrote: »

Thanks. Are those figures per year or per month?

Per year.

Also can you pay extra for a year and then stop doing so?

You can choose from 1 to 20 years.

You did read the link I gave you, didn't you? It's all explained there.

MarcoM

Yes just finished reading.
Would you say buying extra NHS pension for a 35 year old who only has three years worth of previous contributions would be worth it?
The fear of course is that retirement age in 30 years will be 95.....

jem16

MarcoM wrote: »

Would you say buying extra NHS pension for a 35 year old who only has three years worth of previous contributions would be worth it?

It is certainly the best no-risk option. However it obviously has other drawbacks, one of which you mention below.

The fear of course is that retirement age in 30 years will be 95.....

chucknorris

jem16 wrote: »

It is certainly the best no-risk option. However it obviously has other drawbacks, one of which you mention below.

Surely though when you buy additional pension it is based upon a specific calculation, part of which is the reirement year. So isn't the 'additional pension' (not the whole pension) bought then fixed to that retirement age upon which it was calculated rather than a moving target?

jem16

chucknorris wrote: »

Surely though when you buy additional pension it is based upon a specific calculation, part of which is the reirement year. So isn't the 'additional pension' (not the whole pension) bought then fixed to that retirement age upon which it was calculated rather than a moving target?

It's a good point but I don't know how it will be affected with the propsed changes to be honest.

If you pay with a lump sum I can see a case for it to be the retirement age chosen as with accrued rights. Paying monthly I don't know.

chucknorris

jem16 wrote: »

It's a good point but I don't know how it will be affected with the propsed changes to be honest.

If you pay with a lump sum I can see a case for it to be the retirement age chosen as with accrued rights. Paying monthly I don't know.

I don't know either, I rang the teacher's pension to ask them about it and they said that they didn't know (nobody had asked that question before).

My wife (who is an actuary) reckons it will be paid at the age that was used in the calculation, but that is an assumption based on other pension schemes that she has worked on, that would be my logical assumption too, but that might be a dangerous assumption.

It actually says in the NHS pension rules (about additional pension bought):

Q. When is AP paid?

A. AP is paid at the same time as your main NHS pension. If you are a member of the NHS Pension Scheme (Amended April 2008) you can choose to have it paid at either age 60 or 65. In the New NHS Pension Scheme it can only be paid from age 65.

But that I think that might not have been updated to account for forthcoming changes. I am hoping that it remains at 65 (in my case).

However there is a reduction calculation for taking the pension early than paid for, so I don't see how they could reduce the pension on one hand for taking it early but then pay it later without increasing it.

jem16

chucknorris wrote: »

I don't know either, I rang the teacher's pension to ask them about it and they said that they didn't know (nobody had asked that question before).

There is probably a lot of grey areas at the moment. The Scottish Teachers' Scheme is even worse at the moment as no talks are being held with the Scottish Government. They seem to be waiting to see what happens in England.

I'm buying back years by paying monthly with an intended retriement date of 60. With this I know at least that my number of years of service is increasing each year as my statement shows it. So that should be ok.