NHS pension

Sanitas_Lex

Hi guys

So looking for some wisdom!
I'm in my second year working for the NHS. At the end of my second year I have the option to take out my pension as a lump sum. I'm thinking of taking it out and putting it in a private pension (I want to emigrate in a few years time; currently need to work for NHS for 54 years to get full pension [each year you work you get 1/54th of the pension total]). However NHS pension has better protections than private pensions.

Any advice?

Thanks in advance!

andy001

if you're in pension less than 2 years then, You are able to take out money (minus tax relief). If you cross 2years then unable to take out and the money will be in the pot which you may be able to access when you are SPA or sooner (WITH PENALTIES).
Your statement re better protection is spot on! None of private pensions would be able to match NHS pension.
Think hard and take a decision especially if you're likely to return to NHS later after your emigration journey!

kidmugsy

Take it out!!! The taxpayers will pray for you for decades to come.

dunstonh

At the end of my second year I have the option to take out my pension as a lump sum.

That is not an option. It is for people who leave the scheme with less than two years service.

I'm thinking of taking it out and putting it in a private pension

Madness.

currently need to work for NHS for 54 years to get full pension [each year you work you get 1/54th of the pension total])

That isnt quite how you are meant to measure quality. Its a damned fine pension scheme. Far better than any personal pension.

Dazed_and_confused

currently need to work for NHS for 54 years to get full pension [each year you work you get 1/54th of the pension total])

This is a very different view to most have on pensions from an employment.

Historically people have been looking at a specific proportion, for example 40/60ths with no lump sum or 40/80ths with a lump sum, amongst many others.

So on a salary of £30000 you might, in overly simplistic terms, get a pension of £15000 or £20000.

Not many will be expecting a pension of 54/54ths, even if it is a CARE scheme rather than final salary!

TARDIS

I can fully understand that working in the NHS at the moment makes emigrating look very attractive, but have you really thought it through fully?
How certain are you that you will actually emigrate in the end and will it be permanent?
If it's just a distant dream I think you'd be mad to cash it in now.

Sanitas_Lex wrote: »

currently need to work for NHS for 54 years to get full pension [each year you work you get 1/54th of the pension total]). However NHS pension has better protections than private pensions

As others have already pointed out you do not need to work 54 years to get a very generous and guaranteed pension. Please don't throw it away on a whim.

hyubh

Sanitas_Lex wrote: »

At the end of my second year I have the option to take out my pension as a lump sum. I'm thinking of taking it out and putting it in a private pension (I want to emigrate in a few years time; currently need to work for NHS for 54 years to get full pension [each year you work you get 1/54th of the pension total]).

As the others have said, there are a few misunderstandings here:

1. While transferring out to a private pension is an option (specifically, for the period you are in the scheme from 3 months to 2 years), the alternative is not an NHS pension, but a refund of your own contributions, less reclaimed tax relief. Once you are in the scheme long enough to earn a pension, you lose the right to freely transfer out (in a nutshell, transferring out will only become possible to another public sector scheme).

2. The 1/54 fraction refers to the proportion of your pensionable pay for each year that is translated into an annual pension. This nothing to do with 1/54 of a 'full pension', which is a meaningless notion when the scheme doesn't have the concept of maximum accrual (old-style DB schemes did, modern public sector schemes don't, and the concept is just nonsensical for modern private sector schemes, which are DC). Also, the NHS scheme has an active member 'revaluation rate' of CPI+1.5%, so the longer you stay in it, the more the pension earned by earlier years in the scheme outpace inflation.

Sanitas_Lex

Thank you for your responses.

Yes very much planning to emigrate in 3-4 years and to not return. Which is 3-4 years in the pension pot.
Do know that it's safer than private pensions just feeling out and considering options given that I will be working in NHS for 5-6yrs total.

JoeCrystal

Sanitas_Lex wrote: »

Thank you for your responses.

Yes very much planning to emigrate in 3-4 years and to not return. Which is 3-4 years in the pension pot.
Do know that it's safer than private pensions just feeling out and considering options given that I will be working in NHS for 5-6yrs total.

There is no such thing as pension pot of money so bear that in mind. Okay, so if say you got six years worth of NHS pension scheme. For sake of argument, let say you are on £24,000 salary and decide to leave after six years of service. so you get 6 years worth. So assuming no pay-rise for six year, that works out as £2,666 pension by your SPA. Your six years worth of contribution worked out as £10,224 employee contribution or modest £142 per month.

What you get out of it is an index-linked pension rated so real value is maintained until and after your SPA. A 18 years old person on £24,000 would need to put aside 8.5% or £170 per month for next fifty years to get an equivalent pension outside DB pension schemes. A bit extreme perhaps but really highlights just how valuable these pension schemes are in today's context.

xylophone

Transfer out from an NHS pension scheme is restricted.

See page 11

https://www.nhsbsa.nhs.uk/sites/default/files/2017-05/Leaving%20Early%20and%20Transferring%20Out%20Booklet%20%28V14%29%20-%2005.2017.pdf

If you are leaving NHS employment, or just the Scheme, you may be able to transfer your pension rights to one or any combination of the following:

• The NHS Pension Scheme in Scotland or Northern Ireland, if you are employed there. These Schemes are separate from the NHS Pension Scheme (England and Wales) and a formal transfer application
must be made.

• Another registered occupational pension scheme.

• A registered insurance company to purchase an annuity contract, which satisfies the requirements of HMRC (“buy-out policy”).

• A registered personal pension plan, including a stakeholder pension arrangement (only if you have less than two years qualifying membership).

You may only transfer to another pension scheme or arrangement that is registered with HM Revenueand Customs (HMRC) and able to accept a transfer payment from the NHS Pension Scheme.

Time limits may apply for members with less than two years qualifying membership as shown on page 12

For possible transfers to a Qualifying Recognised Overseas Pension Scheme (QROPS) please refer to thecurrent version of the Overseas transfer guide and application pack on our website at:
https://www.nhsbsa.nhs.uk/pensions

Sanitas_Lex

Really useful advice.
Appreciate it thank you.