Nhs pension , defer or not?

markinsouthsea

I am currently in Nhs pension scheme I have 7 years to go until I am 60. I have been looking for a while for alternative jobs outside of the Nhs but to date have always been put off because I did not want to lose the pension scheme.

However it now looks like that our pensionable salary will not increase for at least the next 4 years on top of the previous 3 years pay freeze. So I was thinking if I leave the scheme and become a deferred pensioner my pensionable salary will become frozen at time of leaving but will then be upped each year by an inflation amount, which is better than the current zero increases. I would then in my new job pay the equivalent of 9.3% of salary into a private pension scheme.

In moving to the private sector I would get paid similar salary but this would enable me to work in a role that I have previously steered clear of because of leaving the Nhs scheme, but now with the zero increases I do question whether it is really worth staying in my current job just because of this. I am in the 1995 scheme have 13 years service and intend to retire at 60. Is 7 years paying around £270 a month into a private pension going to be anywhere as if I had stayed in the Nhs.

Any views from the experts would be appreciated.

SomeUser

Whilst your salary won't change, you'll still accrue further benefits if you stay in the scheme. If your accrual rate is 1/80 then you get a further 1.25% of salary every year.

If your salary is £40000 then you accrue an additional £500 in pension per year (if accrual rate is 80ths).
If your pension is £15000 and inflation is 2.5% then your pension increases by £375 each year.

£270 per month in a DC pension isn't going to get you much, but your employer would contribute as well.

I'm not sure I'd stay in a job just for the pension because of my values and beliefs (about living and enjoying life) but others may put security higher and there's no right or wrong answer.

atush

I agree, your NHS pension will go up as you accrue more years, even if your base salary does not.

To get the same in your new pension, you would need to put in 25-30% of earnings (incl tax relief and your employers contribs) which I assume is unlikely. But there are other reasons to move such as job satisfaction so base any change on that.

hyubh

markinsouthsea wrote: »

So I was thinking if I leave the scheme and become a deferred pensioner my pensionable salary will become frozen at time of leaving but will then be upped each year by an inflation amount, which is better than the current zero increases.

How are you affected by the new CARE NHS scheme that starts next year, and in particular, do you qualify for 'full protection'?

http://www.nhsbsa.nhs.uk/4019.aspx

Ironically, if you *do* qualify for full protection and your pay didn't outpace inflation, the CARE scheme would be advantageous yet you wouldn't be allowed to join it.

OldBeanz

atush wrote: »

I agree, your NHS pension will go up as you accrue more years, even if your base salary does not.

To get the same in your new pension, you would need to put in 25-30% of earnings (incl tax relief and your employers contribs) which I assume is unlikely. But there are other reasons to move such as job satisfaction so base any change on that.

Not as straightforward as that because as the OP stated the NHS pension would increase by inflation if they were no longer a member while with pay freezes that element is not included at present.

purdyoaten

hyubh wrote: »

How are you affected by the new CARE NHS scheme that starts next year, and in particular, do you qualify for 'full protection'?

http://www.nhsbsa.nhs.uk/4019.aspx

Ironically, if you *do* qualify for full protection and your pay didn't outpace inflation, the CARE scheme would be advantageous yet you wouldn't be allowed to join it.

The op will qualify for full protection as he is born before April 1962 which is the cut off point.