Starting an NHS pension aged 50+

lesterrad

I am am 18 months into a 3 year NHS contract. I am single, with few assets, earn £47,000 and have been paying 9% of my monthly pay into the nhs pension scheme since I started. I have accumulated around £5k, so far and I have six months to decide if i want to continue with the scheme, before i loose the right to cancel and get a refund. I do not have any other pension and there is no guarantee that I will get another contract when this one finishes. There is a chance that I could continue to work in the NHS until I retire, but I am not sure that even if I continued making the same sort of contributions it would be worth staying with the pension as i started so late. As a contractor there is a greater chance that I may not be in continuous employment and have funds stuck without me having access to them. I am considering withdrawing it an investing in physical gold.

Thrugelmir

lesterrad wrote: »

I am considering withdrawing it an investing in physical gold.

What retirement income will this provide you with?

AlanP_2

So are you saying you have paid in 47k * 9% * 1.5 years = £6345 and have a 5k pot, hence your investment is worth less (at the moment) than you have paid in?

You will have had tax relief on the contributions, some at 40% and and some at 20% presumably so your nett investment will have been less than £6345.

Are you a Contractor i.e. Self Employed or are you employed by the NHS on a 3 year Fixed Term Contract?

Why aren't you paying more in to build a bigger pot?

Kynthia

You're not making any sense. Why would you give up a fantastic return on the money you are contributing just because you might not stay for years, but you might? Do you even understand what you have? Where did you get the £5k figure from as the NHS pension is an annual payment for life and not a pot? Actually a DB pension is ideal to have when starting later in life as it needs to time in the markets to compound and grow so your age is no reason to opt out.

Have you read your scheme booklet? Do you know what your statement is telling you? I don't think you should opt out, but it would be very silly to do so if you don't even understand what you would be giving up?

Brynsam

I presume you are in the NHS 2015 scheme(?), a defined benefit scheme (in this case a CARE scheme). See https://www.nhsbsa.nhs.uk/sites/default/files/2017-05/2015%20Members%20Guide%20%28V7%29%2005.2017.pdf for more info.

You say you have 'accumulated' around £5,000 but that's not how a scheme like this works: it promises you a pension/tax free lump sum based on the rules of the scheme, not what's 'in the pot'. You are getting the benefit of an employer contribution, so why give that up?

lesterrad

Thanks, i just guessed at around £5k as I cant log into the system to get the correct figure, i believe a higher estimate is more accurate. I am a contractor on a fixed term contract and as such have had huge earning gaps over the last 30 years. I am being sensible to realize that the possibility of me having continuous employment until retirement is limited, as will be my ability to continue to make pension contributions. My thinking is that rather invest capital in precious metals which will increase, rather than have it tied up giving me limited return. When my contract finishes i will have such a small pot that i cant imagine it will give pay out much.

lesterrad

Thanks, I am struggling to see the use of having just three years worth of contributions, if at the end of my contract i cant touch it for at least a decade and what it will pay out will be such a small amount.

atush

lesterrad wrote: »

I am am 18 months into a 3 year NHS contract. I am single, with few assets, earn £47,000 and have been paying 9% of my monthly pay into the nhs pension scheme since I started. I have accumulated around £5k, so far and I have six months to decide if i want to continue with the scheme, before i loose the right to cancel and get a refund. I do not have any other pension and there is no guarantee that I will get another contract when this one finishes. There is a chance that I could continue to work in the NHS until I retire, but I am not sure that even if I continued making the same sort of contributions it would be worth staying with the pension as i started so late. As a contractor there is a greater chance that I may not be in continuous employment and have funds stuck without me having access to them. I am considering withdrawing it an investing in physical gold.

Stupid mistake if I may say so. And if not, very poor choice.

2 years in the scheme will give you a DB pension paying a certain amount each year, every year of your life. It will be uprated with inflation each year you are deferred if you leave. It is a no risk pension. You want to replace it with a single asset that produces nothing (no income or dividends) and goes up and down with the markets.

Barmy.

atush

lesterrad wrote: »

Thanks, I am struggling to see the use of having just three years worth of contributions, if at the end of my contract i cant touch it for at least a decade and what it will pay out will be such a small amount.

You cant touch any pension for a decade+. You will get only pence in t he pound for what it is worth now (as you will pay tax and lose the significant employer contribution). Throwing money away in fact.

You are confusing a pension with savings and investments. So save in cash outside the pension and buy as much gold as you like.
Or better yet, set up a S&S isa

lesterrad

Thanks I just dont know enough about it and its all rather confusing. I just cant imagine that three years of contributions from me and my employer is going to result in much of an income in say 15 years time!

greatkingrat

You are missing the point. Three years worth of NHS pension on its own isn't going to be enough to live on in retirement, but it is still better than nothing. A few grand's worth of gold certainly isn't going to be enough to live on in retirement either.

Rather than opting out, you should be looking at ways to increase the amount you are saving for retirement to make up for the years you weren't saving anything.