NHS pension problems

Maverick63

Hi , first time post and am looking for some advice as I am having some difficulties getting straight answers from the NHSBSA. I am a deferred member of the 1995 scheme with 20 yrs and 200 days paid in.I haven't t contributed to this since 2002 and will be 55 in 6 months time I would like to access the 25% tax free sum and take the pension as early payment of preserved benefits to semi retire and make a property investment. I have been informed by NHSBSA that I cannot access the 25% as I haven't paid in after 2008 however I presumed everyone was entitled to this under the new pension rules, they will also not allow an increased lump sum for the same reason.
Can anyone help or confirm that my only option is to take the low lump sum and the monthly payment
Thank you

JoeCrystal

Well, yes. Since you are deferred member of the 1995 scheme. Your lump sum retiring allowance is usually equal to three times your annual pension, which is payable on your retirement. There is no pot of money that belong to you so 25% tax free sum is irrelevant as far as I am aware.

hyubh

Maverick63 wrote: »

I have been informed by NHSBSA that I cannot access the 25% as I haven't paid in after 2008 however I presumed everyone was entitled to this under the new pension rules

What new rules...? You left in 2002, so the scheme rules applicable, in general, are those that were in place in 2002. On specific issues covering legislation can change that, e.g. the inability to transfer out to a money purchase arrangement introduced in 2015, however changes otherwise usually aren't retrospective. The 2008 comes in because that's when the scheme changed its accrual basis, increasing the rate at which pension was earned but removing a standard lump sum in place of an optional one. Those active members in the 1995 scheme had the option of transferring to gain the new flexibility, but it wasn't forced.

Can anyone help or confirm that my only option is to take the low lump sum and the monthly payment

You have golden handcuffs. While those with 2008 scheme membership can choose to 'commute' (i.e. reduce) pension for (extra) lump sum, this is at a deliberately ungenerous rate.

hyubh

JoeCrystal wrote: »

There is no pot of money that belong to you so 25% tax free sum is irrelevant as far as I am aware.

25% of a notional pension value still stands as the tax free cash limit for DB pensions. It's not relevant to the original poster though for the other reason you gave (only would do if they had 2008 or 2015 section membership).

xylophone

You are a deferred member of a Defined Benefit Scheme.

You do not have a pot but a promise to pay a certain level of benefits at Normal Retirement Age which is 60 (55 MHO) in 1995 Scheme.

You are applying to take your deferred pension early on an actuarially reduced basis?

https://www.nhsbsa.nhs.uk/sites/default/files/2017-06/Retirement%20Guide%20%28V23%29%20-%2006.2017%20.pdf

1995 Section

You will automatically receive a retirement lump sum which is normally three times your annual pension. If you have membership on or after 1 April 2008 then you also have the option of receiving a larger retirement lump sum in exchange for a smaller annual pension.


It would seem from the above that only those with post 2008 membership in the 1995 Scheme may commute pension to give a lump sum greater than three times annual pension.

https://www.nhsbsa.nhs.uk/sites/default/files/2017-03/Key%20Notes-1995%20Section%20Awards%20%28web%29-20161122-%28V3%29.pdf

indicates that if you choose to take benefits at age 55, your pension will be reduced by 21% and your lump sum by 14.4%.

Maverick63

Many thanks for the responses things are much clearer to me now, I have been led to believe differently by an IFA.
Has anyone any information on if a transfer out of DB is possible to then access a larger sum than if it was left in?

Silvertabby

Many thanks for the responses things are much clearer to me now, I have been led to believe differently by an IFA.
Has anyone any information on if a transfer out of DB is possible to then access a larger sum than if it was left in?

No, it is not possible to transfer your NHS (public sector unfunded) pension to a private pension fund.

hyubh

Maverick63 wrote: »

Has anyone any information on if a transfer out of DB is possible to then access a larger sum than if it was left in?

Transfers out from unfunded public sector schemes like the NHS one to money purchase arrangements were banned in 2015.

If you want to work around that, get a job at a local school in order to join the LGPS, transfer your NHS benefits, then quit and transfer out... however it is very unclear why exchanging an NHS pension for a 'property investment' would be a good idea in the first place...

xylophone

Has anyone any information on if a transfer out of DB is possible to then access a larger sum than if it was left in?

Post 3

On specific issues covering legislation can change that, e.g. the inability to transfer out to a money purchase arrangement introduced in 2015

https://www.nhsbsa.nhs.uk/sites/default/files/2017-05/Transfer%20Out-UK%20Transfer%20Out%20Guide%20and%20application%20pack-20170516-%28V10%29.pdf

See page 3 above.

Maverick63

I was looking at property investment as a rental income would exceed monthly income from pension and also give me a better legacy for my children as opposed to the paltry death benefits especially if I depart early

bigadaj

Maverick63 wrote: »

I was looking at property investment as a rental income would exceed monthly income from pension and also give me a better legacy for my children as opposed to the paltry death benefits especially if I depart early

What experience of running a property business do you have?