NHS Pension increase

Arnieoak

Hi I'm new to this site and no nothing about money i need help! Long story short my wife works for the NSH, and has been paying about £160 (I think) each month for her pension then she recently recently a letter about the increase and two days later received her payslip saying she is paying £240 a month now! We have our first child due any day now she is worried about finances. That's a huge jump I think the figure is 9.2%. What can we do?
Should she leave the pension scheme but I heard they take a third of what you have saved. Or can you ask for a lower percentage?
Any help would be much appreciated Johnny

hyubh

Arnieoak wrote: »

That's a huge jump I think the figure is 9.2%.

The figure will then be 9.3% (ignoring tax relief, which makes the effective rate lower) - http://www.nhsbsa.nhs.uk/Documents/Pensions/2015-2016_to_2018-2019_Tiered_Employee_Contributions-20150313-(V2).pdf

What can we do?

Assuming she's in the correct contribution band (see the table at the previous link), budget for the end of contracting out next year, which will mean higher NICs for your wife (in exchange for accruing a higher state pension).

Should she leave the pension scheme

No! It's fundamentally superior to what most private sector workers earning your wife's money enjoy. While the employee rate is now quite high, if your wife stays an NHS employee for some years it will provide comparatively generous benefits in retirement.

but I heard they take a third of what you have saved.

Sorry, but whoever told you that is speaking gibberish. If she's been a member of the scheme for more than two years she'd become 'deferred', her benefits increasing by CPI until retirement; you seem to be referring to someone who left within two years and opted for a refund, which will be just the employee contributions previously paid net of the NI and tax relief reclaimed by HMRC. Getting a refund would be the very worst thing to do.

brewerdave

This is the result of the changes to NHS pensions moving to 2015 CARE scheme- it is actually 9.3% for people earning between £26824 and £ 47845.99 pa. The true amount is less because you get tax relief on the payments ,more obviously, if you are on the upper end of this band as you will get relief at 40%.
Still an extremely good scheme to be in tho' !! Assuming that she has been a member of the NHS schemes for more than two years then it would be extremely foolish to withdraw totally. I believe that you can suspend membership ?? Try reading various bits on this site
http://www.nhsbsa.nhs.uk/Pensions.aspx

atush

You should live off savings until she can go back to work if finances are tight. If you have no savings, was it wise to have children at this time? All these things like finances are something you think about before you procreate.

I'd scrimp elsewhere and stay in the pension. Or have her go back to work early

elantan

Maybe phone and check with them, I had similar where they took 7.3% from my wage but I was only due to pay 5.2% so I am getting the overpayment reimbursed next month... having only earned just over £3k last year I kinda need all the money I can get

Arnieoak

Atush. We are financially fine while she is off work, it's the last minute gross jump in rate she is going to have to pay when back to work that is annoying, we only just found out about this looooong before we procreated, and yes we have savings that we'd rather not use from day one of our kids birth. don't appreciate the smugness.
Thank you everyone who helped

Andy_L

Arnieoak wrote: »

Atush. We are financially fine while she is off work, it's the last minute gross jump in rate she is going to have to pay when back to work that is annoying,

Formal consultation on the increase was announced in 2011 and cuts/changes to public sector pensions wasn't exactly unreported in the press.

xylophone

The increase in contributions cannot have come as a surprise to your wife (or indeed anybody in the Scheme)?

http://www.nhsbsa.nhs.uk/Pensions/2657.aspx