2015 NHS pension advice

JPG82

Hi I am looking for some advice about the above pension scheme. A little bit of background about myself. I am 32 and have been working (and paying into a pension) in the nhs for the last 11 years. I am currently in the 1995 scheme but like everyone else will transfer into the 2015 scheme.

I'm at the age where I'm more interested in pension and retirement planning and have spent the last few days reading through the information available.

I am still a bit confused about one point really - age of retirement.

I understand that this will be linked to state retirement age currently 68 for me.

My question is am I able to retire early and take a reduced pension say 63?

I've come across a nhs 2015 scheme calculator online and after entering the relevant info It shows that I will receive the same lump and yearly payment on the new scheme at 63 as I would have on the old scheme at 60.

Does this sound correct?

Thanks for any advice

corbyboy

The calculator is correct in that your lump sum won't be reduced if you retire early.

I am a similar age to you and also in the NHS pension scheme. The thing you need to remember is that the system is likely to change again before we retire.

There is no way the government will be able to go 30 years without tweaking it some more.

JPG82

Thanks for the reply. So I could leave early (say 63) on a reduced pension? (Think calculator shows I'd be 3-4k a year worse off)

I'm hoping the 25 year guarantee will be upheld meaning I should be protected in the 2015 scheme.

kangoora

What you want to consider is opening either a private pension or some other form of investment which you can use for income between the ages of 63-68.

Done correctly this will mean you don't need to start drawing your pension until the age of 68 and means you can take your NHS pension that hasn't been reduced at your scheme normal retirement age.

reeves100

Hi

The NHS pension scheme has many considerations, and you should contact them or seek independent financial advice on this scheme.

1) However, with regard to your first question, and given your age, the pension benefits that you have built up in the 1995 or 2008 sections of the NHS Pension Scheme before moving to the new 2015 Scheme will be treated separately and calculated in accordance with the rules of the 1995/2008 sections, as appropriate. i.e won’t change. Provided you have not had a break in scheme membership of 5 or more years that ended on or after 1 April 2015, your benefits will be calculated on your final salary (pensionable pay).

It sounds like the projection is based on your 11 years of service only, which is not taking into account future service under the new scheme. As you will be entitled to your protected rights under the existing scheme rules you should be able to take them from 60 which is why there is no early retirement reduction and they remain the same.

Future service will be calculated under the new scheme.

2) Most Life insurance companies will offer some form of whole of life cover. An independent financial adviser is able to search the market for you and advise on the best product for you. There are different types of cover and the cheapest policies are renewable which means that the premiums are not guaranteed for life, so again advice on this would be worth it. Standard cover is still very affordable but care must be taken to ensure that premiums can be maintained or cover can be lost. You should easily be able to get cover past 80.

Although your mortgage may be paid off, do you still have a dependent family? Term assurance may offer better value in the short term.

JPG82

Thank you again for the replies.

My plan (if I understand people's answers) is to hopefully retire around 62/63 taking early retirement and thus accepting a lower pension (my wife also works in nhs so will have similar pension to myself).

I am also planning to supplement this pension with an investment I started last year (stocks and shares isa) which I am paying £200 a month into, either by using the savings to live off or convert isa into an income fund. Then at 68 have my state pension also.

Only time will tell if this will work ie will I have enough to live off but in theory I can aim for this?

claire111

Also I would very strongly suggest that both you and you wife look at the figures involved in purchasing NHS Additional Pension.


http://www.nhsbsa.nhs.uk/1289.aspx

http://www.nhspa.gov.uk/PDWeb/PensionCalculators/AdditionalPension/index.htm

It can be purchased in instalments or with a lump sum. It is guaranteed and index linked before and after payment. You can get tax relief on the payments.

For me it is astonishly good value but obviously do your own sums or get your advisor to look it over.

It is may not be available in its current form after 2015.

HTH

JPG82

I will certainly have a look at that. I know in the 2015 scheme you can purchase extra pension but only 3 years worth meaning you can leave at 65 on full pension.

Still a bit unsure if I can leave early, (not can I afford it) but can I actually retire with a reduced pension - can anyone advise?

woolly_wombat

JPG82 wrote: »

Still a bit unsure if I can leave early, (not can I afford it) but can I actually retire with a reduced pension - can anyone advise?

Why take an actuarial reduction when you have so many years ahead of you to put kangoora's excellent suggestion into practice? If you start salting away money steadily into isas and/or personal pensions now then you won't need to take a hit on your incredibly valuable NHS pension.

WW

claire111

JPG82 wrote: »

I will certainly have a look at that. I know in the 2015 scheme you can purchase extra pension but only 3 years worth meaning you can leave at 65 on full pension.

Don't confuse purchasing Additional Pension with purchasing the Added Years that you could on the 1995 scheme - the two are very different. You can purchase up to £5k Additional Pension at the moment even though you are in the 1995 scheme.

The 2015 fact sheet states that you will still be able to purchase Additional Pension. The 2015 scheme also confusingly allows you to 'buy out' 3 extra years.

JPG82

Thanks for all the helpful posts.

I am starting to understand everything a little more clearly now.

If I want to go early I should be buying extra pension - (2015 scheme I can buy 3 years worth and leave at 65) in the meantime start saving etc to pay for the 2/3 years without a pension.

As mentioned I have an investment fund started last year so hoping 32 years saving will be enough.

Thanks again