Retiring from the NHS

Thicko2

I am basing it upon the facts as published when the final agreement was reached back in 2012. Google NHS pension changes 2012 and you will find.

From 2015, the 1995 and 2008 schemes will not accrue any further benefits. Only the new scheme will be used.

http://dh.firstactuarial.co.uk/default.aspx

Suggest you play with the tool above. It compares what you have in either of the old schemes and what you will get in the new scheme and locked in benefits of the old scheme.

I am probably fairly similar position to your partner.

Im 41 now, 19 years in 1995 scheme. To keep the same level of pension payment that i currently have in the 1995 scheme i need to work till i m just shy of 62.


However it forgets to add, that prior to tax relief i am paying 5.5% extra per annum in contributions for the next 20 years for the privilige.


http://www.nhsemployers.org/SiteCollectionDocuments/NHS%20Pension%20Scheme%20change%20illustrations%20FINAL.pdf

Example 3 in here shows what happens to a current 1995 scheme member aged 40 faces when the new scheme is introduced.

Turtle

Thicko2 wrote: »

I am basing it upon the facts as published when the final agreement was reached back in 2012. Google NHS pension changes 2012 and you will find.

From 2015, the 1995 and 2008 schemes will not accrue any further benefits. Only the new scheme will be used.

http://dh.firstactuarial.co.uk/default.aspx

Suggest you play with the tool above. It compares what you have in either of the old schemes and what you will get in the new scheme and locked in benefits of the old scheme.

I am probably fairly similar position to your partner.

Im 41 now, 19 years in 1995 scheme. To keep the same level of pension payment that i currently have in the 1995 scheme i need to work till i m just shy of 62.


However it forgets to add, that prior to tax relief i am paying 5.5% extra per annum in contributions for the next 20 years for the privilige.


http://www.nhsemployers.org/SiteCollectionDocuments/NHS%20Pension%20Scheme%20change%20illustrations%20FINAL.pdf

Example 3 in here shows what happens to a current 1995 scheme member aged 40 faces when the new scheme is introduced.

Thanks for this, I will have a look. I don't remember him receiving any information on this last year. What you've said has felled me a bit to be honest. I really don't want him working that long, although he's healthy at the moment his dad and grandad both died quite young and we want to be able to enjoy time travelling and things. Well we'll just have to save up extra hard I suppose.

:(:(

Spirit_2

Thicko2 is correct.

Staff aged under 50 on 1/April 2012 will have future pension accruals on career average basis in future. Current contributions are protected.

Normal retiement age (NRA)also increases to match state retirement age.

This change came in after the pensions choice exercise. It made the choice exercise pretty irrelevant really.

You may want to read the links as the occupational pension actuarial reduction at 55 will be much higher in future as NRA increases.

Turtle

Thanks both, I have had a quick look at these links. Seems husband is the same as you Thicko2 and would have to work til just under 62 to get the same benefit. But I'm not sure how they can calculate this even as an illustration if it's based on career average earnings?

Also, I still can't find anything on our desired scenario of actually retiring at 55 but deferring drawing the pension. I know there wouldn't be any more contributions going in, but the fund would still be invested.

I feel this info has now thrown all my planning up in the air

BobQ

Turtle wrote: »

Thanks both, I have had a quick look at these links. Seems husband is the same as you Thicko2 and would have to work til just under 62 to get the same benefit. But I'm not sure how they can calculate this even as an illustration if it's based on career average earnings?

Also, I still can't find anything on our desired scenario of actually retiring at 55 but deferring drawing the pension. I know there wouldn't be any more contributions going in, but the fund would still be invested.

I feel this info has now thrown all my planning up in the air

The calculation will probably be an average and there will be a lot of variation between those they assume will have a little income growth (no promotion, CPI level pay rises) and those with significant income growth (those with 3-4 promotions, maybe in areas of scarce skills).

atush

What happens when you are 55, is that the pension becomes deferred- ie no more years are accrued.

The FS/AS parts of your pension will then be set, but the salary part I believe will increase yearly by the index used in the scheme.

Then, after 5 years at 60 you can take all (or just the older part) of your NHS pension. The newer AS bit may have a higher age so you'd ideally take that later, rather than early but reduced.

Turtle

atush wrote: »

What happens when you are 55, is that the pension becomes deferred- ie no more years are accrued.

The FS/AS parts of your pension will then be set, but the salary part I believe will increase yearly by the index used in the scheme.

Then, after 5 years at 60 you can take all (or just the older part) of your NHS pension. The newer AS bit may have a higher age so you'd ideally take that later, rather than early but reduced.

I'm sorry I'm a bit slow with all this, I'm not a stupid person just brand new to all this.

So do you mean that if he wanted to retire at 55 he wouldn't have been paying in anymore anyway? If that's the case that's really good news. Then he could draw his older bit from 60 and his more recent bit after that 'ran out'?

BobQ

Turtle wrote: »

Thanks both, I have had a quick look at these links. Seems husband is the same as you Thicko2 and would have to work til just under 62 to get the same benefit. But I'm not sure how they can calculate this even as an illustration if it's based on career average earnings?

Also, I still can't find anything on our desired scenario of actually retiring at 55 but deferring drawing the pension. I know there wouldn't be any more contributions going in, but the fund would still be invested.

I feel this info has now thrown all my planning up in the air

One other thing to bear in mind.

If your DH left the NHS around 2015 then he would have only his pre-2015 pension to draw at 60 plus whatever other arrangements he makes after leaving. This will accrue at CPI so will essentially preserve its value and be added to whatever pension he accrues in a non-NHS scheme or a personal pension etc.

If he stayed in the NHS for another 13 years and left at 55 he would have his 1995 pension until 2015 plus 13 years in the 2015 scheme. This presents some issues in that he will get his 1995 pension at 60 and his 2015 pension at whatever is his normal retirement age (68?). So if he left at 55 and drew his 1995 pension at 60 it would not include his 2015 Pension unless he wanted to take that part earlier (after substantial actuarial reduction of 40%).

However, if he continued working for the NHS beyond 60 (unlikely from what you say) he would probably not want to take his 1995 pension at 60 unless he went part time, due to a process called abatement.

One other consideration to check (THicko2 may be able to advise) is whether if he were to continue working in the NHS beyond 2015 the "final salary" on which the pre-2015 pension is based is the salary when he leaves the NHS or the salary at 2015. If the former, and your DH has another promotion or two in him, this could increase the value of his accrued pension at 2015 so may be a reason for staying in the NHS?

BobQ

Turtle wrote: »

I'm sorry I'm a bit slow with all this, I'm not a stupid person just brand new to all this.

So do you mean that if he wanted to retire at 55 he wouldn't have been paying in anymore anyway? If that's the case that's really good news. Then he could draw his older bit from 60 and his more recent bit after that 'ran out'?

OP not sure what you mean by "ran out". Your earlier post gives the impression you think that there is a pension fund (ie a fixed amount of money), there is not. Its a Defined Benefit Scheme that pays (the 1995 bit) from 60 until he dies (and if you survive him, will give you a smaller pension). The 2015 bit is also a DB scheme and pays out at a different age but also until he dies. So it does not run out.

atush

Yes it would sem they are confused between defined benefit and defined contribution:

Also, I still can't find anything on our desired scenario of actually retiring at 55 but deferring drawing the pension. I know there wouldn't be any more contributions going in, but the fund would still be invested.

There is no fund, just a promise to pay you based on your ages and final or average salary depending on your scheme.

And you may 'want' to retire at 55, but I can assure you unless you are very unhealthy 55 is quite young and will be more so when you/he get there. And you don't want a reduction of 40% of your pension to do so, so you need to save outside the pension.