NHS Pension

pieropan

My wife is about to return to work part time for the NHS and has the opportunity to start paying extra contributions (or a lump sum) to get what is now known as an Additional Pension.I have a quote of £16,900 to buy an additional annual pension of £1k.
I appreciate that there are all sorts of factors to think about but just wondered if there were any 'expert' views out there on whether or not this represents a good investment.We have got some savings to tap in to (or there is instalment payments via salary deduction).
Thanks in advance
Pieropan

mania112

pieropan wrote: »

My wife is about to return to work part time for the NHS and has the opportunity to start paying extra contributions (or a lump sum) to get what is now known as an Additional Pension.I have a quote of £16,900 to buy an additional annual pension of £1k.
I appreciate that there are all sorts of factors to think about but just wondered if there were any 'expert' views out there on whether or not this represents a good investment.We have got some savings to tap in to (or there is instalment payments via salary deduction).
Thanks in advance
Pieropan

If she was to live for 17 years (after retirement) it would be worth it.

Another way to look at it is that if you can afford that £17k now, what would you be doing with that money if not used for the pension contribution?

If it's spent on a new car, for example, the pension contribution is much more beneficial.

In terms of comparing the NHS benefit Vs. a different pension - £1k pa for £16,900 is quite good, better than what you could buy now - but rates will be different when your wife retires.

hugheskevi

There is a thread on this here.

The value depends on your age. As a general rule Added Pension is better the older you are, but a lot depends on your attitude to a variety of risks.

In previous times I have played around with numbers on it, it has been an okay deal, but certainly nothing to write home about - remember you need to factor in growth between now and retirement, and not just compare the rate to annuity rate tables.

jem16

pieropan wrote: »

I appreciate that there are all sorts of factors to think about but just wondered if there were any 'expert' views out there on whether or not this represents a good investment.

Difficult to answer as you don't say how many years it is until your wife retires.

Basically the £1k additional pension is index-linked from now until she retires so it won't actually be £1kpa by that time - unless of course she is retiring next year.

The £1kpa will also be index-linked in retirement.

kidmugsy

It also depends on whether your wife will pay income tax in retirement. If not an extra £1k untaxed, and index-linked, sounds pretty decent.

pieropan

Thanks for the replies-very useful food for thought.My wife is 54 and will probably work for a couple more years.