32 year till retirement pay our mortgage off Vs NHS pension

AnotherJoe

kara_p_uk wrote: »

Thanks, I didn't know we could rejoin within 5 years that sounds like it is worth looking into.

A little knowledge is a dangerous thing.

kara_p_uk wrote: »

Twe bought the spanish property 6 years ago and the cost of this including the mortgage is only 2.5k a year so finding the cash to pay for that outweighs selling it to me.

What use is it? You cant afford to fly there, you've got the cost and hassle of managing it (does it even break even?) and prices in Spain are going nowhere.
then you moan about having 1p at the end of the month, but now acknowledge you could have £200 free plus the £30k lump sum.

I suppose on the upside, my taxes may be marginally less if you go ahead.

Stubod

!!!!!...GIVE UP the NHS Pension scheme !!!!!

give up a good chunk of "FREE" money ...

ARE YOU MAD....!!!!!!..

.one of the best schemes you could hope for...it would be total insanity.....

jimi_man

kara_p_uk wrote: »

a quick estimate of how much we would pay into the NHS pension (not including our employers additional contribution) over the next 32 years is £240,000 even if we lived to 100 I'm not sure we would get that figure back from the pension fund?

Any others had experience of this??
Thanks
Kara

Hi

With the information you've given it appears that your husband is on just over £48K. If we ignore what he's paid in before and just start from now, by using the NHS CARE Pension formula which is 1/54th every year uprated by CPI + 1.5%, (ignoring inflation and keeping it in today's money) he will end up with a yearly pension of nearly £37K, which will have cost him £134K in contributions (£188K gross). That doesn't take any account of pay rises or previous contributions.

Using your figures, it suggests you earn around £16-17K. Using those figures, gives you a pension of around £12K per year, costing you £38K in contributions. Again no account of pay rises or previous contributions.

I'm sure you can work out the maths but you don't need many years of that sort of pension income to get back what you put in (less than four). That income is index linked, with spousal benefits.

So you are looking at around £50K of pension income between the two of you in today's money. With a further £16K of state pensions, assuming they exist, it gives you quite a reasonable retirement. I don't know how many people on this forum are looking to that sort of income (in today's money), but I suspect you'd be in the upper bracket.

And you want to throw it away to take out a life assurance policy???? And pay extra off your mortgage??

If you've only got 1p to last till you get paid, but you have a second home in Spain then I'd suggest (without being rude) that you need to work on your money management skills!

Don't do it!!!!!

Maelwys

kara_p_uk wrote: »

6 years ago and the cost of this including the mortgage is only 2.5k a year so finding the cash to pay for that outweighs selling it to me.

So that's 2.5k / 12 = £208.33 a month, plus a lump sum from any equity you have in the property. By comparison, you'd get an extra £430 * 0.6 = £258 a month after tax if your husband stopped paying into his NHS Pension.

Surely that's a bit of a no-brainer, given that the second option results in the loss of so much pension provision?

Posting a Statement of Affairs in the Debt-Free Wannabe forum is probably going to be your best bet though (they're still blunt and truthful, but a bit more gentle about it than the folks in here!)

kara_p_uk

my mum is 55 this year. Her teachers pension has been quoted as 25k lump sum and £330 a month she has paid into her pension for about 20 years and some of that as part time but had a gap of 6 years in the middle.

my husbands mum has stage 4 terminal lung cancer and she has just turned 70 so yes alive still but very sick for the last 2 years and was diagnosed with early onset dementia about 5 years ago.

my brothers and I are all over 30 so none of us qualify for dependents pension.

my grandma died at 54, all her children were also over 30 at that time.

I have no grandparents on either side who are going strong in retirement.

My husbands maternal grandad died when my mother in law was 6. His grandma died when he was about 12 at 60. His dads parents did live longer but both died by 62.

I didn't mention them because they died such a long time ago not because they were still enjoying their pensions.

Number75 wrote: »

You mention a parent each and one grandparent that died young - but not the ones who I expect are still going in retirement!

In fact the ones that died young died during their working lives - so they're actually an advert for the dependents element of a pension.

kara_p_uk

The £430 is from the NHS pensions calculator after the cost of tax. The amount we are actually currently paying is 505 him and 125 me.

Maelwys wrote: »

So that's 2.5k / 12 = £208.33 a month, plus a lump sum from any equity you have in the property.
By comparison, you'd get an extra £430 * 0.6 = £258 a month after tax you'd get if your husband stopped paying into his NHS Pension.

Surely that's a bit of a no-brainer, given that the second option results in the loss of so much pension provision?

Posting a Statement of Affairs in the Debt-Free Wannabe forum is probably going to be your best bet though (they're still blunt and truthful, but a bit more gentle about it than the folks in here!)

kara_p_uk

Thank you this is really helpful, it has explained the numbers a lot clearer than my head had done. He doesn't have any previous contributions he only joined in 2016. We knew we lived to the edge of our means with our income but this April payday when we didn't realise he would be going up to the next pension contribution bracket is why we have panicked.

jimi_man wrote: »

Hi

With the information you've given it appears that your husband is on just over £48K. If we ignore what he's paid in before and just start from now, by using the NHS CARE Pension formula which is 1/54th every year uprated by CPI + 1.5%, (ignoring inflation and keeping it in today's money) he will end up with a yearly pension of nearly £37K, which will have cost him £134K in contributions (£188K gross). That doesn't take any account of pay rises or previous contributions.

Using your figures, it suggests you earn around £16-17K. Using those figures, gives you a pension of around £12K per year, costing you £38K in contributions. Again no account of pay rises or previous contributions.

I'm sure you can work out the maths but you don't need many years of that sort of pension income to get back what you put in (less than four). That income is index linked, with spousal benefits.

So you are looking at around £50K of pension income between the two of you in today's money. With a further £16K of state pensions, assuming they exist, it gives you quite a reasonable retirement. I don't know how many people on this forum are looking to that sort of income (in today's money), but I suspect you'd be in the upper bracket.

And you want to throw it away to take out a life assurance policy???? And pay extra off your mortgage??

If you've only got 1p to last till you get paid, but you have a second home in Spain then I'd suggest (without being rude) that you need to work on your money management skills!

Don't do it!!!!!

kara_p_uk

I didn't moan about only having 1p left. It was just a fact of what I had in my bank.

Our budget currently includes the cost of flying there and using the flat.

AnotherJoe wrote: »

A little knowledge is a dangerous thing.



What use is it? You cant afford to fly there, you've got the cost and hassle of managing it (does it even break even?) and prices in Spain are going nowhere.
then you moan about having 1p at the end of the month, but now acknowledge you could have £200 free plus the £30k lump sum.

I suppose on the upside, my taxes may be marginally less if you go ahead.

justme111

kara_p_uk wrote: »

It has just made us think about whether we want to plan for a future we may not have or whether there is a way to enjoy some of the money now while saving or creating another retirement plan which may not be as lucrative as the NHS pension but would give us the chance to stop working earlier and enjoy life now.

Nothing will give you better chance to retire from 60 onwards than NHS pension. I suggest that you think about alternative provisions for before 60 once you got the minimum you want for after 60 in NHS pensions and your state pensions. Re rejoining NHS - please study current rules, do not take me on my word, it was just an idea for you. Most likely it is the case but check it anyway.

justme111

kara_p_uk wrote: »

Our budget currently includes the cost of flying there and using the flat.

Well fair enough then. You pay your money , you make your choices. Expensive holidays now (at a cost of £2500 a year plus flying) and investment in Spanish property or pension provisions or children's activities - something will have to go or diminish. Suppose all worthwhile causes so no right or wrong. Just do no kid yourself that if you diminish pension contributions and invest them out of NHS you will get the same or better return. May be worth doing it though as by the looks of it you are on the track of being far richer when retired than now (taking into account there would be no mortgages and no expenses related to children then) so may be sensible to use a bit of that future money now.