Is it worth having the NHS pension for 7 years?

Lois_and_CK

I've seen a job advertised with the NHS that I am considering applying for, which comes with the Career Average Revalued Earnings (CARE) pension scheme.


I'm age 41 at the moment, and CK (husband) and I have a plan that we'll both work full-time for approximately another seven years, at which point we're going to give up our current full-time jobs and both work part-time for ourselves. We will fully retire at around age 60.


I've had problems in the past with job-related panic attacks and anxiety, and I gave up a job with an employer-contribution of 10% pension and fairly decent bonus. I now have a job that I love - it's stress-free, very interesting and I've not had any panic attacks since I left my last job. The stress-free aspect of my job, any job I do, is really important. However, while the salary is the same as my last job, there is no pension (NEST won't kick in until 2017) and no bonus. For the sake of my health, CK and I decided a reduction in my benefits was worth it. Luckily, CK has a very good salary sacrifice pension, and we can afford to make decent contributions to S&S ISA and personal pension for me out of after-tax salary. Life is much improved.


The job I've seen advertised is a similar role to the one I do now/did in my past job. I'm loathe to give my current job up as it's so good for my mental health and is unusually stress-free for this type of role, and taking any other job could be a risk. But this one would come with the CARE NHS pension, and I know they are very good pensions.


So my question is, would it be worth having the NHS CARE pension for seven years, leaving it at around age 48? The salary would be around £30k - I've no idea how to work out what seven years in the NHS pension would get me upon retirement.

atush

Yes, it is worth getting the NHS pension for 1-7 years. Be in it as long as you last there, and if you have to leave due to PAs in the first two years, get a transfer to your old pension or a new PA sp you dont lose the employers contribs and TR.

Once you have over 2 years in the job, the pension can be left in the scheme.


So if you get the job- join.

hugheskevi

I've had problems in the past with job-related panic attacks and anxiety

The ill-health provisions in the NHS pension may be particularly valuable.

So my question is, would it be worth having the NHS CARE pension for seven years, leaving it at around age 48? The salary would be around £30k - I've no idea how to work out what seven years in the NHS pension would get me upon retirement.

You would get a pension of about £4,500 p/a, payable from State Pension age. That is worth around £85,000. [all depends on assumptions, these figures are using pretty standard assumptuions]

CLAPTON

some details of the NHS pension form 2015 is shown here
http://www.nhsbsa.nhs.uk/Documents/Pensions/SD_Guide_(V1)_(website)_03.2015.pdf

in simple terms it seems to be that your pension if you earned 30,000 for 7 years would be

30,000 x 7/54 = 3,888 per annum plus index linking

just based on a quick scan of one page of the document

dunstonh

Is it worth having the NHS pension for 7 years?

Yes. Absolute no brainer. No alternative option will come close.

bigfreddiel

hugheskevi wrote: »

The ill-health provisions in the NHS pension may be particularly valuable.



You would get a pension of about £4,500 p/a, payable from State Pension age. That is worth around £85,000. [all depends on assumptions, these figures are using pretty standard assumptuions]

Actually the pension is indexed link so I think it would be worth a lot more than £85k

Cheers fj

hugheskevi

Actually the pension is indexed link so I think it would be worth a lot more than £85k

Then you would be wrong

Use the Hargreaves Lansdown pension calculator with settings of existing pension fund £85,000, expected retirement age 67 (OPs State Pension age), date of birth 13th March 1967 (ie someone aged 48 today, to replicate the OPs position in 7 years), female, nil tax free cash, no future contributions, annual growth of 5%, annual charge of 0.5%, 50% spouse benefit, 3% increase in payment each year, 5 year guarantee and monthly payment.

That replicates the NHS pension as closely as possible (including SCAPE discount rate, albeit with plausible charges - there is an argument to use nil charge) using the available assumptions and results in an annual income of £4,550.

Alternatively, consider that in the 7 years the OP would earn around £210,000. Setting aside assumed returns (obviously notional in the unfunded NHS scheme) a pension worth £85,000 is around 40% of the £210,000 earnings. If the value is 'worth a lot more than £85K' you are suggesting that the generosity of the scheme is in excess of 50% of salary. Public service pensions may be pretty good, but they are not at that level

Happier_Me

It is certainly worth being in the NHS pension scheme for 7 years from a financial point of view.

Only you can decide whether moving jobs is worth the risk from a health point of view though. If this turns out to be a stressful job then personally I don't think a good pension outways doing a job that makes you ill and miserable - 7 years is a long time.

Lois_and_CK

WOW. Those are amazing amounts of money. Having always worked in the private sector, nothing offered there has ever come anywhere close to that in 25 years of working! Well, I suppose in that case I will at least apply for the job and see if I can get an interview. It would be very tough to turn that down.

Thanks everyone for replying. And thanks for showing me how to work out the maths.

Lois_and_CK

I've found out more about the job, and it turns out that it's a fixed contract for 21 months - so I wouldn't get the 7 years pension I coveted I'm now thinking it's not worth leaving my stress-free job for 21 months in the NHS pension.

atush

Well it depends. On a lot of these contracts, they can give you a new one or extend it for 12 months at a time. Inquire if that could be the case or not. If not, leave it- if so.................?