Any downside to transfer to NHS scheme?

TcpnT

My daughter has just started working for a local healthcare trust and will therefore become a member of the current NHS pension scheme for the first time.
Prior to this she was working in a school in Essex and has three years service in the Essex county CARE scheme.
Her new salary is slightly higher and should increase with progression.
It seems to me that for the sake of simplicity, if nothing else, she should transfer her previous pension into the NHS scheme. She expects to work for the NHS for some time and quite probably much of her future career.
Is there any downside to doing this?

AlanP_2

I don't know, but the first thing I would do is request the NHS scheme to obtain the transfer details from Essex LGPS.

The relative pensions can then be compared.

kidmugsy

Downside? Read this thread:
https://forums.moneysavingexpert.com/discussion/5913031/nhs-survivors-pension-help

TcpnT

Downside? Read this thread:
https://forums.moneysavingexpert.com/discussion/5913031/nhs-survivors-pension-help

Yes I did see that this morning - food for thought but not quite the kind of downside I was thinking of.

Assuming both scheme operate smoothly are there any obvious advantages or disadvantages to transferring?

xylophone

It may not be of importance to her but she will not be able to transfer out of the NHS Scheme to a DC Scheme.

Dazed_and_confused

If the schemes have different dates when the pensions can be taken she might be giving up some flexibility, particularly if the Essex county scheme has an earlier date than the NHS scheme she is now joining.

There may be other more important things but something to consider if there isn't much straight financial gain by transferring it.

kidmugsy

TcpnT wrote: »

Yes I did see that this morning - food for thought but not quite the kind of downside I was thinking of.

But maybe you should consider it. In a world of clerical incompetence, IT collapses, hacking, and whatnot, it might be rather comforting to end up receiving pension from more than one source.


Maybe a useful rule of thumb would be "if the decision looks marginal opt for having more than one pension".

hyubh

TcpnT wrote: »

Prior to this she was working in a school in Essex and has three years service in the Essex county CARE scheme.
Her new salary is slightly higher and should increase with progression.
It seems to me that for the sake of simplicity, if nothing else, she should transfer her previous pension into the NHS scheme. She expects to work for the NHS for some time and quite probably much of her future career.
Is there any downside to doing this?

My two pence:

- CARE-only benefits to transfer means any salary differences are irrelevant. Also, normal pension ages are the same between the CARE LGPS and NHS schemes.

- CARE benefit transfers between public sector schemes involve the old revaluation rate being maintained, so the fact the NHS scheme has a higher revaluation rate compared to the LGPS means nothing.

- Don't be too concerned about current admin performance, because in the real world, this doesn't drive decisions about whether to outsource if currently in-house, or if already outsourced, whether to change provider or not. (Or indeed: if currently done in-house, whether to get cocky and go for external work, win it, then drop the ball with the day job.) As such, good admin performance at the time of asking doesn't tell you anything about admin performance in 5 years time, let alone 20.

- This leaves only your own reason for transferring standing, viz., 'for the sake of simplicity, if nothing else'. However, how much weight she should put on this, I'm not so sure. Keeping separate means, she leaves open the possibility of drawing the small LGPS pension at a different time to the NHS one, and in extremis, transferring it out to a money purchase arrangement before then.

TcpnT

- CARE benefit transfers between public sector schemes involve the old revaluation rate being maintained, so the fact the NHS scheme has a higher revaluation rate compared to the LGPS means nothing.

- This leaves only your own reason for transferring standing, viz., 'for the sake of simplicity, if nothing else'. However, how much weight she should put on this, I'm not so sure. Keeping separate means, she leaves open the possibility of drawing the small LGPS pension at a different time to the NHS one, and in extremis, transferring it out to a money purchase arrangement before then.

Thanks - these are the kind of considerations I was hoping to discover as I have little personal knowledge of either of these schemes.

So in a nutshell there is no financial benefit in doing the transfer and leaving them separate does give some flexibility in the future. I was not aware of the differences in the transfer out policies of these schemes. So is it fair to say that a transfer from the NHS scheme to a DC scheme is never possible but some LGPS scheme do allow it? - or is it not that cut and dried?

kidmugsy

TcpnT wrote: »

So is it fair to say that a transfer from the NHS scheme to a DC scheme is never possible but some LGPS scheme do allow it?

LGPS pensions can be transferred because they are "funded" - there is a pile of money accumulated to pay them.

Like all other large schemes for government employees the NHS scheme is not funded; it relies simply on promises that will be met from future tax revenues.

andy001

kidmugsy- you're spot on!
NHS scheme is like a ponzi scheme- At the moment, it's in surplus- no one knows the future.. if younger one stop paying- older ones won't get pension, (in case, if Govt is bankrupt).
In summary- One is funded from actual pot and another one is ; a promise from the 'virtual' pot!