leaving the NHS for the private sector: what should I do with pension?

masco1

Hi
After 38+ years, I have decided to move into the commercial sector. I am 58. Question is: do i take my NHS now or do I leave it until I am 60. I just can't work out what is best. Any thoughts very welcome. thanks

dunstonh

Question is: do i take my NHS now or do I leave it until I am 60. I just can't work out what is best.

Which best fits your objectives?

With no financial information or any objectives given, that is the best we can do.

masco1

I won't need the money from the pension as my salary in the new job is enough for me to live on. My nhs 'retirement age' is 60. I believe there is an actuarial reduction if I took the pension now. Is this the case if I defer taking pension until I'm 60? I am on the 1995 scheme. I guess what I am trying to ascertain is what are the pros and cons of taking the pension payments this year

JoeCrystal

masco1 wrote: »

I won't need the money from the pension as my salary in the new job is enough for me to live on. My NHS 'retirement age' is 60. I believe there is an actuarial reduction if I took the pension now. Is this the case if I defer taking pension until I'm 60? I am on the 1995 scheme. I guess what I am trying to ascertain is what are the pros and cons of taking the pension payments this year

There is no point in taking it if you can live on the salary. I can see that the most significant disadvantage would be paying more taxes. Better to wait until your retirement age so you can take pension without any reduction.

GunJack

If your NRA is 60, take it at 60. If your NRA is 60 or 65 or 67 then you'll get actuarial reduction if you take it before the NRA.

AnotherJoe

Pro= more money immediately (that you dont need so is it a pro?).
Con= lose a fair bit of it in tax, which if you dont need the money now would seem, on the face of it, to be monumentally stupid since you'll never get that money back and whats left will just sit in a bank losing money to inflation.

badmemory

So taking it (when you don't need it) will reduce your pension for life with the actuarial reduction. What will it do to your tax affairs, would it push you into 40% tax? Or just make it all taxable at 20% because your personal allowance has been used by your new job?

masco1

thanks for all comments. I am a 40% tax payer. Seems best to leave it until my normal pension age when I shall finish my new job.

AnotherJoe

masco1 wrote: »

thanks for all comments. I am a 40% tax payer. Seems best to leave it until my normal pension age when I shall finish my new job.

You'd be several bananas short of a bunch to take it now then.


You should check what your options are as to when you take it, eg if you can take it age 60 with no reduction, you might find that you can postpone it and get an uprated amount when you do take it, or you might not, so in that case you should take it as soon as its available at full rate even if you'd pay tax due to working (and that might mean you decide to retire earlier).

xylophone

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

Does your new employer offer a pension?

Had you considered pension contributions to take you out of 40% tax?

http://www.actuarialpost.co.uk/news/pension-contribution-can-help-avoid-new-higher-rate-tax-185.htm

atush

So I would nto touch it until it pays out in full (or later if it can be uprated).

Then, as a 40% taxpayer, join the ne ork pension and pay in at least enough to take you out of HRT