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Retiring from the NHS
Comments
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AS = average salary
You do need to look into the Lump sum/avc situation.
I do feel with both S&S isas, and a personal pension to draw off (ie the 25% TF lump sum and Drawdown (known here as DD) you can easily ride those 5 years if your mtg is paid off.
As for NI, ask them how many years your have each accrued and any S2P via a pension statement. then you can both plan going forwards.
Having said this, it is important to discuss your situation. Are you working? Do you have children? A pension? From what I understand of the new state pension, you will no longer be able to claim off a spouse's contribution.0 -
Surely if he is aged 40 he will move into the career average scheme so have a pension in two parts, one from the current and another from the future scheme? You can apply to DWP for his contribution record (well he can!)
No he won't. He made the decision to stay in the scheme he was in as that was more beneficial (by quite some margin actually) than changing to the 2008 scheme as he doesn't want to stay in this job until 65.Remember that for some of that time he will have been contracted out of the State Second Pension. Any qualifying year counts. Before 2010 this was based on a minimum income during the year (I think it was 50 times the lower earnings limit for NI contributions).
OK, I remember doing this quite a while back but I don't know that he did it. Will need to check I think.0 -
The "career average" is the new (2008) scheme. At every change, one has the opportunity to stay one's existing scheme or move to the new one. Because of other changes it depends whether it is worthwhile or not.
Yes that's correct and it was beneficial for him to remain in the 1995.As for State Pension, someone posted recently what constituted a "qualifying year".
I really think best to get a State Pension forecast and speak to NHS pensions.
Thanks for that, I tried to get one online for me but it said I wasn't old enough (this was via my employer I think though). I will look into this and get him to contact the administrator.I often feel that I repeat this, but a lot of my friends are retired NHS / public service. They do a variety of part-time / casual jobs of all kinds.
He's got lots of skills and is always doing something so I don't think he'll have any problem with part time work if he wants / needs it.0 -
AS = average salary
You do need to look into the Lump sum/avc situation.
Thanks, yes we will do this.I do feel with both S&S isas, and a personal pension to draw off (ie the 15 TF lump sum and Drawdown (known here as DD) you can easily ride those 5 years of your mtg is paid off.
Bit confused now, sorry. Yes to the S&S ISAs, but we want the pension to remain untouched to 60 so we wouldn't have either the lump sum or drawdown would we? The mortgage will be paid off barring some disaster.As for NI, ask them how many years your have each accrued and any S2P via a pension statement. then you can both plan going forwards.
Good idea thanks. As a minimum we'll know if we'll both have 35 yrs contributions (I think we will, if not it will only be a year or two off and I've read on here you can buy extra years at what seemed a very cheap price if I understood it correctly.)Having said this, it is important to discuss your situation. Are you working? Do you have children? A pension? From what I understand of the new state pension, you will no longer be able to claim off a spouse's contribution.
I work full time as well, have done for nearly 16 years. We don't have children, nor are we planning to have any. I have my own pension scheme through my employer, I earn around £30k and my contributions are 18%.0 -
And what does your employer pay in? Sounds good though.Bit confused now, sorry. Yes to the S&S ISAs, but we want the pension to remain untouched to 60 so we wouldn't have either the lump sum or drawdown would we? The mortgage will be paid off barring some disaster.
I said a personal pension. Which is separate- would get tax relief but no employers contribs. But can be taken from 55- via 25% TFLS and then either DD or flexible Drawdown if he has 20K of pension income from elsewhere. Which can be used either before or after he gets his SP at his correct age.
'and I've read on here you can buy extra years at what seemed a very cheap price if I understood it correctly.)
You can with restrictions, but you can also take into account any state second pension accrued to date (which will stop when the new higher rate comes in).0 -
The NHS scheme isn't a personal pension. Using a personal pension in addition to the NHS scheme is one way to help delay taking the NHS workplace pension. You're right that it is better not to take the NHS pension early.He doesn't want to take it from 55 though, as the deduction is quite large (24% less than at 60).
Yes, income drawdown is the main alternative to buying an annuity. It's not quite as simple as 5% because the maximum that can be taken out is controlled by something called the GAD Limit. It'll be higher than 5% but I don't know how much higher because it depends in part on the interest rate paid on a particular type of UK government bond.Is the income drawdown instead of buying an annuity? Is it as simple as saying 5% drawdown on a £300k pot would be £15k pa?
If a person has an income of at least £20,000 from certain types of pension income, including workplace defined benefit pensions like the nHS one, the state pensions and annuities, they can take an unlimited amount out of a personal pension using something called flexible drawdown. This is taxes as normal income so taking out a huge amount in one year wouldn't be a good idea but it can be a useful way to do things like clearing a mortgage if you're deliberately planning to use mortgage money to span a gap between retiring and getting a workplace pension.
Just the usual meaning that 40% tax relief makes paying into pensions very attractive.I'm not sure what's meant by your comment on the 40% tax relief, but he is a higher rate tax payer.
It's good that you're using the full ISA allowance and switching to S&S ISA investing instead of savings accounts. Saving just 1.5% mortgage interest rate isn't very attractive.Currently we have an offset mortage at 1.5%. We are using the mortgage to invest the full amount in ISAs (this is our 3rd year) and then paying this amount off the mortgage each year.
Nicely done. Lots of landlords don't realise that's possible instead of using a BTL mortgage secured on the let property but it's a superb way to do it.We also own a BTL property which was purchased with equity from our home (so is also at 1.5%)
You're doing pretty well. Just need to learn a bit more about personal pension rules, notably capped and flexible drawdown, so you know how to exploit those, and about investing via pensions or S&S ISAs.I'm wondering if we're going about things in the right way. I believe we are in a good position financially compared to a lot of people our age, but I'm not sure if we're really making the most of what we have. I do wonder if it's worth paying for some advice?
For his state pension, the NHS schemes is contracted out of S2P, formerly SERPS, so his maximum number of years under the new flat rate cut to employee pensions might be higher than 35. This is because contracting out will have reduced the rate at which he accumulated state pension so he might have less than £144 worth accumulated at the time the new rules are accumulated. If so, more years will count until he gets to £144 worth. If he's over £144 more years won't add anything even if he has less than 35 or 30 or even 20 years.0 -
Surely if he is aged 40 he will move into the career average scheme so have a pension in two parts, one from the current and another from the future scheme? You can apply to DWP for his contribution record (well he can!)
Bob - unless he was 50 on a cetain date in 2012 where some protrection is in place you are correct.
The 1995 schemes benefits will be locked in 2015, i.e. years earned as a % of final salary, retirement aged 60.
Service beyond this point will be on the new career average scheme, with a retirement age of state pension. If the poster is 40, could be 67/68 at this point.
The pension will be in 2 parts as you suggest.0 -
And what does your employer pay in? Sounds good though.
Employer contributions are 13%, rising to 15% in 2015 along with a maximum further 3% of AVC matching.I said a personal pension. Which is separate- would get tax relief but no employers contribs. But can be taken from 55- via 25% TFLS and then either DD or flexible Drawdown if he has 20K of pension income from elsewhere. Which can be used either before or after he gets his SP at his correct age.
Thanks for explaining, I wasn't appreciating work pension v personal pension. It's never crossed my mind that we should potentially be paying into private pensions as well.
'You can with restrictions, but you can also take into account any state second pension accrued to date (which will stop when the new higher rate comes in).
Thanks, I need to look into this side of things.0 -
The NHS scheme isn't a personal pension. Using a personal pension in addition to the NHS scheme is one way to help delay taking the NHS workplace pension. You're right that it is better not to take the NHS pension early.
Sorry yes, brain wasn't registering personal pension and not work pension.Yes, income drawdown is the main alternative to buying an annuity. It's not quite as simple as 5% because the maximum that can be taken out is controlled by something called the GA Limit. It'll be higher than 5% but I don't know how much higher because it depends in part on the interest rate paid on a particular type of UK government bond.
If a person has an income of at least £20,000 from certain types of pension income, including workplace defined benefit pensions like the nHS one, the state pensions and annuities, they can take an unlimited amount out of a personal pension using something called flexible drawdown. This is taxes as normal income so taking out a huge amount in one year wouldn't be a good idea but it can be a useful way to do things like clearing a mortgage if you're deliberately planning to use mortgage money to span a gap between retiring and getting a workplace pension.
Thanks, I need to read up on this. It was only yesterday I read that buying an annuity was no longer compulsory.Just the usual meaning that 40% tax relief makes paying into pensions very attractive.
It's good that you're using the full ISA allowance and switching to S&S ISA investing instead of savings accounts. Saving just 1.5% mortgage interest rate isn't very attractive.
I'm considering Vanguard Lifestyle 80% at the moment, but in all honesty it's because it seems very popular on here. All the different funds, providers etc are rather otherwhelming and I don't really know where to start. Would it seem a sensible option for a beginner investor?Nicely done. Lots of landlords don't realise that's possible instead of using a BTL mortgage secured on the let property but it's a superb way to do it.
Thanks, it's good to be doing something right!You're doing pretty well. Just need to learn a bit more about personal pension rules, notably capped and flexible drawdown, so you know how to exploit those, and about investing via pensions or S&S ISAs.
Any books you could recommend? I'm quite a structured learner and trying to make sense of the vast amount of info on the web is difficult.For his state pension, the NHS schemes is contracted out of S2P, formerly SERPS, so his maximum number of years under the new flat rate cut to employee pensions might be higher than 35. This is because contracting out will have reduced the rate at which he accumulated state pension so he might have less than £144 worth accumulated at the time the new rules are accumulated. If so, more years will count until he gets to £144 worth. If he's over £144 more years won't add anything even if he has less than 35 or 30 or even 20 years.
Right, so thinking it's 35 years is a bit misleading then. Will check with them how many we've both built up then at least we won't be speculating.0 -
Surely if he is aged 40 he will move into the career average scheme so have a pension in two parts, one from the current and another from the future scheme? You can apply to DWP for his contribution record (well he can!)
Bob - unless he was 50 on a cetain date in 2012 where some protrection is in place you are correct.
The 1995 schemes benefits will be locked in 2015, i.e. years earned as a % of final salary, retirement aged 60.
Service beyond this point will be on the new career average scheme, with a retirement age of state pension. If the poster is 40, could be 67/68 at this point.
The pension will be in 2 parts as you suggest.
If I have understood you correctly, there is nothing in the information we have about the schemes to suggest that is the case. What are you basing that information on?0
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