Leaving NHS pension after max qualifying years?

Dr_Wu

Hi

I have a colleague who is 55 and has Mental health Officer Status (i.e. he could go now but is planning to work for one more year.

He has the maximum qualifying years i.e. 40/80ths but is continuing to pay into the NHS pension scheme (1995 section).

He pays approx £350 pcm into the pension but given that he is not 'earning' any more qualifying years, would he be better off just leaving the scheme for the last year and pocketing the £4K or so?

I suppose what I'm wondering is, would it affect his pension when he comes to leave in a year's time? Is he just paying 'dead money'?

I suppose if he had a big pay rise coming I could see the point as the final salary would influence the size of the pension, but we're only getting 1% next year so that's not an issue.

Any thoughts, I surely must be missing something?

Thanks in advance

mummytummy

I may be wrong but one of the benefits of continuing to pay into his pension would be the death in service payment, to receive this you have to be a active contributor, no one expects it will happen but I know of work colleagues this has happened to and financially their spouses/partners would be better off.

Hope this is of help

molerat

If not a contributing member he would lose the life cover

atush

which can be replaced a lot cheaper than 4K per year.

He could contribute to a Sipp, or AVCs?

jem16

Dr_Wu wrote: »

He has the maximum qualifying years i.e. 40/80ths but is continuing to pay into the NHS pension scheme (1995 section).

He pays approx £350 pcm into the pension but given that he is not 'earning' any more qualifying years, would he be better off just leaving the scheme for the last year and pocketing the £4K or so?

You are allowed to have a maximum of 45 years, not 40. See page 28 of the following document. Also page 20 is applicable to 1995 section.

http://www.nhsbsa.nhs.uk/Pensions/Documents/Pensions/SD_Guide_-_online_B-W_(V10)_04.2013.pdf

[Deleted User]

Not entirely unrelated to the issue at hand and not important enough to warrant a new thread:

My mother has the same pension (NHS, Mental Health Officer Status, started before 1995, I think late 80s is when she started) and from the documentation I've read it seems like a fantastic pension, especially with the option to retire at 55. Am I correct in thinking this is one of the better pensions a person could have?

jem16

citricsquid wrote: »

Am I correct in thinking this is one of the better pensions a person could have?

One of the best.

Andy_L

Dr_Wu wrote: »

Hi

I have a colleague who is 55 and has Mental health Officer Status (i.e. he could go now but is planning to work for one more year.

He has the maximum qualifying years i.e. 40/80ths but is continuing to pay into the NHS pension scheme (1995 section).

He pays approx £350 pcm into the pension but given that he is not 'earning' any more qualifying years, would he be better off just leaving the scheme for the last year and pocketing the £4K or so?

I suppose what I'm wondering is, would it affect his pension when he comes to leave in a year's time? Is he just paying 'dead money'?

I suppose if he had a big pay rise coming I could see the point as the final salary would influence the size of the pension, but we're only getting 1% next year so that's not an issue.

Any thoughts, I surely must be missing something?

Thanks in advance

AIUI, for those in the old scheme the maximum years is 45 not 40, although that final 5 must be accumulated after normal pension age (ie 60 for most members, 55 for MHOs)

Dr_Wu

Andy_L wrote: »

AIUI, for those in the old scheme the maximum years is 45 not 40, although that final 5 must be accumulated after normal pension age (ie 60 for most members, 55 for MHOs)

Andy, my understanding is that whilst it is theoretically possible to get to 45/80ths the maximum pensionable service for someone under 60 is 40 years, (the various factsheets seem really vague on this). Since my colleague will be going at 56 then the extra year won't really count for much beyond death in service insurance....I could easily be wrong though!

Dr_Wu

Andy_L wrote: »

AIUI, for those in the old scheme the maximum years is 45 not 40, although that final 5 must be accumulated after normal pension age (ie 60 for most members, 55 for MHOs)

(No surprise to you obviously) but you were spot on! After 55 for MHO's, pensionable service continues to be accrued at 2x rate up to a max of 45/80ths.

I'm out the door at 55 not a day later so it won't affect me (only max 40/80ths up to normal retirement age) but it does make a difference to my colleague who is staying on for that extra year.

Thanks again

jackyann

I suggest your colleague contacts NHS pensions. I always found them very helpful.
They have obviously, a very detailed knowledge of the different pension schemes (most current NHS employees fall into 3 categories: pre-1995; 1995-about 2008(I think); and after that)

"Special Classes" were abolished in 1995, so the number who qualify are very few now. Your colleague must have been one of the last to begin work at 15 in the NHS as it was about 40 years ago that the school leaving age was raised to 16.
Also unusual as even back then you couldn't work with patients until you were 16, but could of course do domestic/admin/clerical work. You could begin Orthopaedic or Psychiatric training at 17, but general or children's nursing began at age 18.