is it worth buying extra years in NHS scheme

rooster

my wife and I are both nurses and members of the NHS scheme and wondering if it is worth buying extra years. We are trying to get ourselves in a position that enables us to leave the NHS at 50 or 55. We have no mortgage or other debts, no children and currently save £2000 a month (£1000 in HL Vantage fund and £1000 YBS reg saver) We have maxed out our ISA's and have saved £65000 so far, is worth paying a lot more into NHS scheme to boost pensions for early retirement or simply continue to invest

peterg1965

I asked the exact same question of my IFA this morning. My wife has an NHS pension. Her answer was that she considered it far too expensive to buy extra years. Whether that is just in my wife's circumstances I am not sure, she is 44 with 14 'pension years' in total over a 25 year period.

Ian_W

Get the costings from the pensions dept at your Trust. NHS pensions has/is changing, but unless it's changed for you because of your age, nurses can retire with an immediate pension at 55 - though, of course, unless they started work at age 15 it's not a full pension.

Mrs W would have been 4yrs short of a full pension at 55 so about 12yrs ago she/we decided to buy the extra years. It is expensive in that you have to pay both employee and employer contributions but you do get tax relief on them and can spread them over the remainder of your service.

So she can now retire in 18 months time with full pension and tax free lump sum a full 4yrs earlier than would otherwise have been the case.
We think it worthwhile but only you can decide and you need to know the figures to do that.

Andy_L

If you retire early at 50-55 you will loose 40-25% of your pension.

If you would reach 40 years of service by 60 (normal retirement age) you cannot buy extra years (pro rata'd so you can't exceed 40 years)

Depending on your age, and thus the cost of extra years it might be better to use ISAs etc so save enough to bridge the years between stopping work & taking your NHS pension. Its a tricky calculation which depends on a lot of variables such as:

age
years of service
tax rate (higher/lower)
Likely career progression

happilass

Hi
this is my first post so be gentle with me!
i am a nurse in the NHS i have about 24 years contributions, i had a break to bring up our son and am now back, for last 8 years. I am probably at my career height! now and earn 25000/annum part time. I am 54 this year and hope to retire in 5 years time. Do people think that it would be useful to buy extra years.

MABLE

happilass wrote: »

Hi
this is my first post so be gentle with me!
i am a nurse in the NHS i have about 24 years contributions, i had a break to bring up our son and am now back, for last 8 years. I am probably at my career height! now and earn 25000/annum part time. I am 54 this year and hope to retire in 5 years time. Do people think that it would be useful to buy extra years.

Not very polite to hijack someone elses thread. You should start a new thread.

Sapphire

MABLE wrote: »

Not very polite to hijack someone elses thread. You should start a new thread.

Well, she's on topic - don't think there's anything wrong with her post myself! She hasn't 'hijacked' someone else's thread - just asked a pertinent question. :cool:

happilass

Hi
sorry i haven't posted before so didn't know what to do. I apologise to anyone i have offended by hijacking the thread i thought anyone could ask a question on the same subject. Sorry to offend Mable

Lazy_Runner

happilass wrote: »

Hi
this is my first post so be gentle with me!
i am a nurse in the NHS i have about 24 years contributions, i had a break to bring up our son and am now back, for last 8 years. I am probably at my career height! now and earn 25000/annum part time. I am 54 this year and hope to retire in 5 years time. Do people think that it would be useful to buy extra years.

Not an expert, but here goes

If you wanted to retire early, you would have to put away extra money. The places you could put it are:
savings account - not a great rate of interest but very flexible.
In the stock market; but with your 5 year window, that is the absolute minimum to be in the stockmarket. But I am not sure if it would be worth buying the sort of stocks/bonds that pay high incomes. The advantage of this approach is that you can continue drawing on the income after you retire. Also if you stick the money in an ISA, then you can withdraw it later, rather than it being stuck in your pension pot.
Put into your pension; this is expensive as stated above, but you do get tax relief.

Your best bet is probably talking to your NHS pensions service and see what your extra contributions might bring you in 5 years.
This might be also the time to see and IFA. But not a commission earning one. I would suggest you see a fee-paying adviser or a New Model Adviser. (more advice on this in the Savings and Investment Board).

But one final word of warning, you will probably be on a reduced income. So just ensure you have paid off ALL your debts by the time you retire.

HTH

Lazy_Runner

rooster wrote: »

my wife and I are both nurses and members of the NHS scheme and wondering if it is worth buying extra years. We are trying to get ourselves in a position that enables us to leave the NHS at 50 or 55. We have no mortgage or other debts, no children and currently save £2000 a month (£1000 in HL Vantage fund and £1000 YBS reg saver) We have maxed out our ISA's and have saved £65000 so far, is worth paying a lot more into NHS scheme to boost pensions for early retirement or simply continue to invest

I would continue to invest as you then have fexibility with the money.
Having said that I don't know how pensions will affect your situation should you need to go into a nursing home.

happilass

hi
thank you Lazy Runner this is very helpful. Thank you.
happilass