NHS pension vs. SIPP

kidmugsy

greenglide wrote: »

There is something about NHS and teachers, they are reluctant to join a scheme the rest of us would kill for.

Which means that these costly schemes probably do a poor job of attracting and retaining staff. So scrap 'em.

chrissiesurfergirl123

Let's try to be a little less harsh to OP who has genuinely asked for advice.

zagubov

OP has been paying off extortionate credit card debt, not student loans money. Understandable so no reason to have a go.

Awm, join the NHS pension now. I was ill-advised to forfeit it when I left hospital work for full-time study. The family member who gave me the advice can't look me in the eye now. it is taking me decades to bring myself to the proper level of pension savings.

awm112

Thanks. I'll sort out joining tomorrow whilst on strike :P
It seems that there's an option to buy additional pension, could do that to make up for two missing years?

zagubov

awm112 wrote: »

Thanks. I'll sort out joining tomorrow whilst on strike :P
It seems that there's an option to buy additional pension, could do that to make up for two missing years?

Depends how its done. I'd definitely look into it. I ended up on the teachers pension and took out past added years and AVCs. The past-added years were much much better value but my scheme no longer offers them to new joiners. It's nobody's job to sell you such things, as nobody benefits from it except for you yourself. If your NHS scheme still has such a system, look into starting it as soon as you're sure.

If it doesn't, AVCs may be an option but somebody'll be making money out of that so do your homework before buying them.

Maybe ask your union/professional association.

racing_blue

Awm112 your future self will thank you for learning about pensions.

The main difference is that the value of a SIPP will be exactly what it costs, plus unknown investment returns over time. Whereas the value of NHS pension is defined by other parameters. To use the parlance, NHS pension scheme is defined benefit.

The cost of a NHS pension is based on earnings. You sacrifice a small proportion of your gross income. This is the employee contribution. The exact rate varies, but your rate is likely to be 9.3% at this stage in your career.

The annual value of an NHS pension (2015 scheme) is based on 1/54 of career average revalued earnings. That's how much you'll get paid each year when you retire. It's index linked, so will keep going up in retirement. Annuities which behave similarly cost an awful lot to buy.

1/54 of career average does not sound much, but the secret sauce is in the word "revalued". This means applying an above-inflation dynamising factor to each year's figures, so they keep up with inflation and more. Currently CPI + 1.5%, compounded annually. This can really swell the numbers as the years go by.

This makes the NHS scheme a good choice for most people.

kidmugsy

zagubov wrote: »

Maybe ask your union ...

I always chuckle at that because my union was useless on pensions. In fact it was useless on almost everything: I much preferred to deal with profit-making companies.

zagubov

kidmugsy wrote: »

I always chuckle at that because my union was useless on pensions. In fact it was useless on almost everything: I much preferred to deal with profit-making companies.

That's a bit too much like asking a barber if you need a haircut!

xylophone

Thanks. I'll sort out joining tomorrow whilst on strike :P
It seems that there's an option to buy additional pension, could do that to make up for two missing years?

You'll have time to read the guide to your pension scheme to which I linked in Post 5.

paparossco

Not as good as the 1995 or 2008 schemes but still one of the best. Now tagged to the state pension age so don't look for it before you are nearly seventy......ok if you are a Pathologist not so good for us if you are a surgeon :rotfl: