NHS pension vs. SIPP

jabberwock95

hyubh wrote: »

Leaving aside any other aspect, your claim about pension terms is completely wrong. The amount of change compared to the private sector has been frankly minimal, and it's deluded to think otherwise. Or, put another way, at the last round of change, the unions completely bested the government, whatever the tough-sounding rhetoric of the latter (and good for the unions involved, that's their job).

Deluded? Your posts responding to my request for advice are coming off as quite aggressive and annoyed, is that the intention?

All I said was that our pension terms have changed three times in 20 years. We have a 1995 scheme, a 2005 scheme and a 2015 scheme. What used to be final salary is now CARE. What have I said that you disagree so strongly with? Feel free to educate rather than insult me.

hyubh wrote: »

Until you give more details, this is like asking how long a piece of string is. E.g., what is your age, how do you see your career progressing, what other savings do you have, what age are you looking to retire at, how much income are you expecting to need in retirement, what's your propensity for risk, etc...

Fine. I was mainly curious whether one option was quite clearly better than the other regardless of circumstances, as with the original question by the OP.

Thrugelmir

jabberwock95 wrote: »

Deluded? Your posts responding to my request for advice are coming off as quite aggressive and annoyed, is that the intention?

Your base point of view is well off track and without any substance or understanding of how the "real" world works in practice. Has it originated from speaking to other people? Any particular source.

bigadaj

jabberwock95 wrote: »

Deluded? Your posts responding to my request for advice are coming off as quite aggressive and annoyed, is that the intention?

All I said was that our pension terms have changed three times in 20 years. We have a 1995 scheme, a 2005 scheme and a 2015 scheme. What used to be final salary is now CARE. What have I said that you disagree so strongly with? Feel free to educate rather than insult me.



Fine. I was mainly curious whether one option was quite clearly better than the other regardless of circumstances, as with the original question by the OP.

Unfortunately there is a lot to educate from your current understanding.

Public sector pensions have been mad less generous, yet over the same time period any from of defined benefit equivalent scheme has been comroehensiveky wiped out in the private sector.

So a complaint that a final salary scheme has been reduced to a career average scheme might compare with a final salary to a defined contribution in an equivalent job in the private sector.

Numbers will vary but this means that nominal employer contributions of anything up to or above 30% for the final salary scheme have reduced to probably less than 10% for the defined contribution scheme, the care scheme will lie somewhere between those two extremes.

There is a complaint that teh government has hit pensions but they are unsustainable with the state of the public finances, teh fact that many public sector wages have hugely increased in the last couple of decades and the ever increasing life expectancy. Tax can't or won't rise to pay these pensions, and borrowing has been stretched pretty much as far as is feasible, so that only leads to a reduction in benefits.

hyubh

jabberwock95 wrote: »

Deluded? Your posts responding to my request for advice are coming off as quite aggressive and annoyed, is that the intention?

If you hadn't persisted to assert, in conspiratorial tones, that the government cannot be trusted to keep its occupational pension promises, I wouldn't have used that word...

The closest thing over several decades is perhaps the change from RPI to CPI a few years back. However, this was part of a general switch in the government's preferred inflation measure, and private sector DB schemes that didn't specifically specify RPI followed suit. Further, where it is common for increases to be capped in private sector schemes, they remain uncapped in public sector ones.

All I said was that our pension terms have changed three times in 20 years. We have a 1995 scheme, a 2005 scheme and a 2015 scheme. What used to be final salary is now CARE. What have I said that you disagree so strongly with?

Jobs in the private sector with similar pay to doctors in the public sector not so long ago typically had similar, sometimes even better, pension arrangements. While at this pay level pensions haven't completely bottomed out, a good quality DC arrangement still does not compare to what remains a good quality DB arrangement in NHS land. To deny this is at best uninformed.

In the case of moving to CARE specifically, various private sector schemes did that too within the past 10-15 years. Rather than heralding a rebirth of private sector DB, what has commonly happened is that these schemes closed within a few years anyway.

I was mainly curious whether one option was quite clearly better than the other regardless of circumstances, as with the original question by the OP.

As I explained, your question is different to the OP's, which was about opting out entirely. Joining at all is a no brainer; purchasing additional pension is not, and needs further info to avoid a pretty random answer. If you don't want to provide that further info, then no one can properly help you.

jabberwock95

OK, nowhere did I claim that the NHS pension isn't more generous than defined contribution schemes. That much is plain, accusing me of denying it could not be further from the truth. I only wondered aloud that if you are not able to contribute for several years whether opening a SIPP might have some benefit over buying additional pension in terms of diversifying investments, considering the less generous value of bought pension. Considering the government has shown willing to unilaterally change the contract terms of student loans I didn't think that wondering if something similar could happen with pensions warranted being dogpiled and labelled delusional.

In any case, thanks for the help. Now that I know there isn't an obviously better answer I can look into both options in more depth.

System

Have both, draw the NHS one at state pension age and the sipp before, having one stable pension would allow you to afford to take a riskier sipp. Perhaps wait until you have a child before starting the sipp, then transfer an isa into it and claim extra child tax credit

hyubh

jabberwock95 wrote: »

OK, nowhere did I claim that the NHS pension isn't more generous than defined contribution schemes.

The point is, where DB used to be common in the private sector for people at your sort of pay level, it now is not, and has been replaced by less valuable DC arrangements. Ergo, the fact NHS pensions are a bit less generous than before, for a middling or high earner, isn't evidence of the government's nefariousness. On the contrary, when it comes to pensions, the public sector is an excellent employer.

I only wondered aloud that if you are not able to contribute for several years whether opening a SIPP might have some benefit over buying additional pension in terms of diversifying investments.

Urgh, how many times do I have to say it - no one can give a proper answer, given the very limited info you've given...

Considering the government has shown willing to unilaterally change the contract terms of student loans

Erm, still rubbish evidence of a 'threat' to public sector pension promises... Seriously, just drop the idea that a reason not to buy additional NHS pension is that the government may renege on the deal at a later point. Purchasing additional pension may or may not be a good idea, but this is not a reason against.

In any case, thanks for the help.

If you want help, give a bit more about your situation and expectations, and it will very likely be given. Until then, I'm out...

jabberwock95

MatthewAinsworth wrote: »

Have both, draw the NHS one at state pension age and the sipp before, having one stable pension would allow you to afford to take a riskier sipp. Perhaps wait until you have a child before starting the sipp, then transfer an isa into it and claim extra child tax credit

Yeah, this seems to me to be one big benefit of opening a SIPP. You can take NHS pension early but one of the stipulations is that you have to have ceased all forms of NHS employment. Having a SIPP would be a bonus if for example I wanted to wind down my employment and supplement my income rather than retire altogether.

dunstonh

You'll probably have to forgive me on this point, but at the moment there is a huge amount of distrust between NHS workers and the government.

NHS has one of the worst reputations for misinformation and intentional troublemaking by union reps. Of all the public sector roles, the NHS is the one that time and again sees people with incorrect information and assumptions.

jabberwock95

dunstonh wrote: »

NHS has one of the worst reputations for misinformation and intentional troublemaking by union reps. Of all the public sector roles, the NHS is the one that time and again sees people with incorrect information and assumptions.

Like what? Assuming the answer is something to do with finances rather than politics.