maximising pension

edrushuk

Hello


I have just started at the NHS, so part of their CARE pension scheme. Previously, I have contributed into work/NEST pensions half heartedly and at the age of 48 I most likely have a tiny pot of about £8000. I know very poor, I know I have not done myself any favours. I am now trying do what I can to make up SOME the difference. I can put aside about £150 per month on top of my pension contributions and looking to see what is the best way to do this


a) start a 2nd pension - I could put it into one the old ones I have on hold
b) into an ISA taking advantage of the tax free saving available.
c) investing into the Post Code Lottery..lol


Seriously...any pointers would be great.


Thank you in advance.


Susanna

atush

When do you plan to retire? I think the Care scheme is state pension age.

If you want to go earlier, then looking at a personal pension/sipp could be a good idea (or contributing to an old one if not NEST- but only if the costs are low and the range of investments good).

This will boost your 8k pot until it is big enough to fill the gap between when you want to retire, and your Care pension and SP pay out.

greenglide

b) into an ISA taking advantage of the tax free saving available.

Previously, I have contributed into work/NEST pensions half heartedly

Since you have said that your pensions contributions have been "half hearted" can you keep your hands off this until you retire?

With pensions you get tax relief on the way in and currently you get 25% tax free on the way out so they are usually better value but you cannot access the money until 55 (planned to increase to 56 and 57 in future). The tax relief for basic rate tax payers may be increased may be increased in the budget (and it may not!).

In your shoes I would start a Personal Pension and put in as much as possible. You would thank yourself in 10 - 15 years time.

Maelwys

edrushuk wrote: »

I have just started at the NHS, so part of their CARE pension scheme. Previously, I have contributed into work/NEST pensions half heartedly and at the age of 48 I most likely have a tiny pot of about £8000. I know very poor, I know I have not done myself any favours. I am now trying do what I can to make up SOME the difference. I can put aside about £150 per month on top of my pension contributions and looking to see what is the best way to do this

The 2015 NHS Scheme (the one you'll have been enrolled in) kicks in at state pension age and has rather large actuarial reduction penalties for retiring early.

I'm in the same scheme, and intend to invest in a SIPP (Personal pension) so that I can retire early and live off the SIPP until the NHS pension kicks in... or even delay taking the NHS and State pensions by a few years so that the amount they'll pay out increases due to deferral.

If you're a Higher Rate taxpayer, investing into a SIPP is probably your best bet... however if you're a Basic Rate taxpayer like me, you'd likely be better served by saving up now (keeping your money in high interest savings or current accounts for example - the 3-5% return you'll get from these is guaranteed and likely greater than you'll get in a normal SIPP) and then transferring the cash into a SIPP later on if there's still any tax benefit to doing so by then...

edrushuk

Hello all, and thank you for your answers. Just a little more detail

I don't think I will be able to retire until the retirement age of 67. so I am hoping I will have another 18 years of working yet to go.

When I talked about doing it half heartedly is that I contributed the minimum amounts for the times I was in a pension, most likely about 10 years of my working life.

I think I will put the money in my NEST account and hopefully build it up from there.

Susanna

hyubh

edrushuk wrote: »

I don't think I will be able to retire until the retirement age of 67. so I am hoping I will have another 18 years of working yet to go.

Investigate whatever is the NHS scheme's equivalent to an APC contract in the LGPS, i.e. purchasing additional DB pension. Rationale: you don't have much currently, so why not accrue more DB pension (under OK terms) while you still can.

woolly_wombat

My suggestions:

1. Investigate what you would get if you transferred all of your previous pensions into the NHS scheme, see
   http://www.nhsbsa.nhs.uk/Documents/Pensions/Transfer_Booklet_(V14)_online_10.2015.pdf
2. Investigate purchasing additional NHS pension, as suggested by hyubh, see
   http://www.nhspa.gov.uk/PDweb/PensionCalculators/AdditionalPension/index.htm
3. Investigate setting up a SIPP or stakeholder pension if you think you might want to retire before state pension age, to fund the gap between leaving employment and taking your NHS and state pensions

Get your skates on if you're going to see what you'll get by transferring in old pensions as I believe it would need to be done and dusted within a year of starting at the NHS.

The good news is that you have plenty of years left in which to build up entitlement to the full new 'flat rate' state pension and will also have a generous NHS CARE pension.

woolly_wombat

woolly_wombat wrote: »

1. Investigate what you would get if you transferred all of your previous pensions into the NHS scheme, see
   http://www.nhsbsa.nhs.uk/Documents/Pensions/Transfer_Booklet_(V14)_online_10.2015.pdf

Oh dear, not possible with the [STRIKE]useless[/STRIKE] NEST pension until April 2017 or on reaching 55:
https://www.nestpensions.org.uk/schemeweb/NestWeb/public/helpcentre/contents/can-a-worker-transfer-their-money-out-of-nest.html

NEST is great for employers because I understand there are no set-up costs, but the government really should have got a shifty on re the transfer facility IMHO.

FatherAbraham

edrushuk wrote: »

b) into an ISA taking advantage of the tax free saving available.

Not great if you're a higher-rate income-tax payer. ISAs lock in today's income-tax rates, whereas pensions defer income taxation until withdrawal.

Warmest regards,
FA

atush

however if you're a Basic Rate taxpayer like me, you'd likely be better served by saving up now (keeping your money in high interest savings or current accounts for example - the 3-5% return you'll get from these is guaranteed and likely greater than you'll get in a normal SIPP) and then transferring the cash into a SIPP later on if there's still any tax benefit to doing so by then...

I dont recommend this approach- as with 18 years to go, the compounding would be a substantial part of any pension gains.

kidmugsy

woolly_wombat wrote: »

the government really should have got a shifty on

I enjoyed that Freudian slip.