NHS Pension Fund - is it still worth it?

Miss_J

I am an NHS worker and currently pay into the pension fund. I started paying into the fund in December 2008 so I am in the new NHS scheme. Next month my contributions go up approximately £46 a month and having discussed this with others am wondering if it's still the best option.

I'm a total pension novice but have paid into a pension fund of some sort for the last 10 years. I have a frozen final salary pension which I paid into for 4 years, a frozen stakeholder pension which I paid into for 2 years and now 4 years contributions into the NHS pension.

Someone I was talking today was talking about ISA's and saying that I should look into paying into an ISA instead of my Pension fund.

I have no form of savings (currently paying off student debts amassed after training to work in the NHS) and have a mortgage with life cover that covers and extra £50,0000 on top if the mortgage.

Is there an easy way to consider my options?

DavidLaGuardia

YES with capital letters!

Pound for pound the NHS pension is DEFINITELY worth it. You could not possibly create the same benefits yourself unless you happenned to be be lucky through a high risk investment.

You contribution is a fraction of the cost.

Anyone who is elgible to join is a FOOL not to.

I cannot make myself clearer.:)

bigadaj

The nhs scheme, whilst not as good as a few years ago, is far better than anything in the private sector. You should therefore keep paying in, the only concern being that you mention you have little or no savings. It's always a good idea to have 3-6 months emergency fund, ideally in cash isas,not having this means you haven't got the flexibility for anything unexpected. You mention life cover for your mortgage but you probably have this through your job, if you have no dependents then it could be worth cancelling this and diverting he premium into savings.

dunstonh

I am an NHS worker and currently pay into the pension fund.

The NHS pension is not a pension fund. It is a pension scheme.

Next month my contributions go up approximately £46 a month and having discussed this with others am wondering if it's still the best option.

If that is what it says on your payslip then in reality it costs you less as you can deduct the tax relief and the lower NI you will pay.

Someone I was talking today was talking about ISA's and saying that I should look into paying into an ISA instead of my Pension fund.

That person is dangerous for your finances. Perhaps they are a troublemaker who gives out bad information on purpose. This is not a borderline case where an ISA may or may not be better and the differences are marginal. This is the NHS pension which, even in its proposed modified form, is far superior to any alternative option available to you. If they are not a troublemaker then they are a fool. Do not listen to them at all costs. It would rank amongst one of your worst financial decisions in your life.

To give you some idea, that £46 you pay into the pension costs you about £35 in your take home pay. To match the benefits of the pension (and associated benefits that go with it) you would have to pay around £400pm.

How can this person you were talking to justify paying £400 to an ISA to match the same benefits costing you £35 in the pension?

atush

That person is a complete Numpty and do not listen to them.

I agree that paying an extra 40 or so is a pain, but there is NOTHING you can do with your contribs that will be better than paying into the NHS scheme. It is still better than anything available to those who dont' work int he PS including ISAs.

By all means, save into ISAs alongside your pesnion in case you want to retire earlier? Just not instead of.

And dont' forget, your PA is going up next year to 9.2K.

Miss_J

Thanks all.

Guess it's best I stay where I am and in the scheme as it exists today. Also thinking it might be a good idea to set up an ISA and any spare coppers can be put in there to save up a seperate little pot. My only concern is how I'm going to manage to work in the job I do (very physicial) until the new NHS retirement age, ah well, was 39 yesterday so still gives me a fair bit of time to decide how to tackle that one.

jem16

Miss_J wrote: »

My only concern is how I'm going to manage to work in the job I do (very physicial) until the new NHS retirement age,

You can still retire earlier but your pension will be actuarially reduced. If you use a S&S ISA as well as the NHS scheme, you could use that to supplement the reduced pension.