NHS Pension & AVC

keep_it_simple

Hi,
I'm hoping to get a little advice from you if anyone would care to help ?

I,ll just give a little back ground as I'm sure it will be relevant.

I have been in my NHS pension from 2003.
I am 52 years old.
I have a 9 year old child.
I have a 46 year old partner also works for Local Government, he's also pays into a pension.
I could have retired at 50 I think, but can't afford to.

My questions are,

What are the best options for us as a family?
I would like to retire as soon as poss, I've had a life changing event and my heart is not in it any more.
We do however have a mortgage to pay, it's around £89000 and is on 0.75% deal.
My mortgage is £345 per month but I over pay and make the payment up to £400.
I was thinking of using my child benefit to increase the mortgage payment up to £480 is this a good idea?
I don't have any ISAs as I had to use them to pay for a funeral 2 years ago, hence why my heart is not in it any more.
Can I buy AVC ?
Can I use all the AVC for my 25% lump sum?
Will I the get a bigger NHS pension because I've not used any of that pension as a lump sum ?

Sorry for the long post.

Hope someone can help me please.

Thank you.

atush

What rate is your mtg?

I don't think you can use the AVC to fund the LS like you can with LGPS. If you could, it would mean a larger pension but I don't hink you can. Jem will know and come help I am sure.

AS for AVCs, they are tied to your main pension and must be taken at the same time. A personal pension (that can be taken as early as age 55) and S&S isas are better fro funding an early retirement than AVCs. But if you will take your whole pension then (and it wont be reduced), an AVC could work esp if done from payroll as you will save NICs as well as tax.

If you have had to spend all your savings (very sorry for your loss), building back up an emergency pot should be your first port of call.

jem16

atush wrote: »

What rate is your mtg?

I don't think you can use the AVC to fund the LS like you can with LGPS. If you could, it would mean a larger pension but I don't hink you can. Jem will know and come help I am sure.

NHS AVCs cannot be used to fund the lump sum.

But if you will take your whole pension then (and it wont be reduced), an AVC could work esp if done from payroll as you will save NICs as well as tax.

No NIC savings either as NIC are based on the gross salary.

There is no advantage to using NHS AVCs over any Personal Pension.

jem16

keep_it_simple wrote: »

Hi,
I'm hoping to get a little advice from you if anyone would care to help ?

I,ll just give a little back ground as I'm sure it will be relevant.

I have been in my NHS pension from 2003.
I am 52 years old.
I have a 9 year old child.
I have a 46 year old partner also works for Local Government, he's also pays into a pension.
I could have retired at 50 I think, but can't afford to.

Your normal retirement age is 60 unless you are a member of the special classes which would be 55. Would you plan to retire at age 55 (if able) or 60?

Can I buy AVC ?
Can I use all the AVC for my 25% lump sum?
Will I the get a bigger NHS pension because I've not used any of that pension as a lump sum ?

Unfortunately no.

Andy_L

When you say life changing do you mean your health? If so you may be able to retire now on I'll health grounds

atush

Bereavement?

Spirit_2

You can retire from 50 but with an actuarial reduction.

http://www.nhsbsa.nhs.uk/Pensions/Documents/Pensions/Actuarially_Reduced_Early_Retirement_ARER_Factsheet.pdf

If you are really contemplating VER this year you are looking at a 65% reduction at age 52. With 11 years in the pension scheme you are looking at a pension of (11/80 of your salary)x 65% plus a lumpsum. see the NHSBSA website to calculate.


Is this enough for you to retire on?

Even if your heart is not in your job now, it may be that time will help.

atush

A 65% reduction to me would be unacceptable. I would try to work on longer, and save outside your NHS spension in a PP and S&S isas so as to have enough to retire before your Scheme age, but to delay taking the NHS as long as possible.

keep_it_simple

Hi. Sorry I've not got back to anyone. Busy hectic day yesterday !
Thank you for the advice. Although I have to admit a lot of it over my head !

My mortgage rate is 0.25 above Bank of England base rate. It's a life time tracker.

Yes it was a Bereavement, my daughter died suddenly and we had an inquest and all that involves.

I have to find a bit of info stored on my laptop which relates to my questions and I'll get back on soon.

Thanks everyone.

keep_it_simple

Hi, this is the bit that made me think I can take my AP as my Lump Sum and have a bigger pension,

Can someone explain please?

Increasing Your Benefits Additional Pension (AP)
AP is a flexible way of increasing your Scheme pension. It allows you to choose to buy extra annual pension and see clearly how much the purchase will cost. Under this option you elect to buy a set amount of annual pension for an agreed amount of contributions that you can choose to pay either as a lump sum or as a regular payment for an agreed period of time.
AP is paid at the same time as your main Scheme pension. If it is paid before your normal pension age it will be reduced to take account of its early payment. AP can be bought at anytime during the year as either:
 personal cover which increases your own pension benefits only
 dependants cover, which increases your own pension and the benefits that will be payable to your spouse, partner or dependent children after your death.
AP does not include an automatic lump sum but you can include your AP in the total pension that is given up, or commuted, to provide a bigger lump sum.

jackyann

So sorry to her this.
You won't be in a "special class" as these effectively stopped before 2003.

On the whole you should leave your NHS pension untouched, as it is index-linked, and usually the best value is to take the smallest lump sum and the biggest pension. Of course, circumstances vary.

I know this isn't what you asked, but can I also suggest that you don't burn your boats? You may have already done this, but I would talk to your manager and ask about a leave of absence (in the current climate they are often happy to do this)
This gives you a chance to see how things are, whilst keeping your options open. A secure NHS job is no small thing to give up If you can grieve & take stock without the pressure of work, but with the option of returning (maybe to a different role, maybe shorter hours) you may find things look different in 6-12 months' time.
My apologies if this advice is unwanted.