Topping up an NHS Pension - choices, choices!

PoorPaul

Hi,

My wife has an NHS pension, and is hoping to retire at 55 which gives her just over 5 years to top up her pension a bit.

Sticking with the options available from the NHS, there appears to be a choice of either Prudential or Standard Life - (see this link)

The Prudential option seems relatively straightforward, but the Standard Life option then appears to give further options e.g. the Group Stakeholder plan or the Group Additional Voluntary Contributions (GAVC) plan :doh:

Can someone assist in putting these options into plain English and based on the above timescale is one better than the other ?

Thanks in advance

Oliver1191

Have you considered opening a sipp?

hugheskevi

is hoping to retire at 55 which gives her just over 5 years to top up her pension a bit.

This is quite important. Are you looking to increase her NHS pension, which she will take (actuarially reduced) at age 55, or are you looking to build up a separate pension to use before starting to draw the NHS pension?

Sticking with the options available from the NHS, there appears to be a choice of either Prudential or Standard Life

These are the options to build up a separate Defined Contribution pension.

You could also choose to pay extra to buy ERRBO (reduces the age from which the NHS pension is payable without reduction for early payment) or Added Pension (increases the NHS pension.

Which is best depends on your objectives and risk tolerance.

Can someone assist in putting these options into plain English

All of them are just ways in which your wife can put money into a pension, receiving tax relief, and investing the contributions in various funds (eg bonds, equities, property or a combination).

and based on the above timescale is one better than the other ?

Looking at the charges, neither look attractive. Wider investments at a lower charge are available in the retail pension market (eg Stakeholder pensions, personal pensions and self-invested personal pensions)

PoorPaul

Thanks, not easy to get my head around all this. Not ruling out SIPPs etc but have another question on this topic....

I'm in the LGPS and have an AVC with the Pru, which appears to be 'connected' to the Pension.

With my AVC, I understand I can take a max of 25% of the combined total value of my pension pot (LGPS pension, lump sum & AVCs) tax free in cash - so effectively the total value of my AVC.

Is the Pru's NHS version of the AVC different?
With the NHS one it says "When you decide to start taking your benefits from your scheme, you can take up to 25% as a tax free lump sum." - so is that 25% of ONLY the accumulated AVC (i.e. completely unconnected to the Pension) ?

saucer

As I understand it the way in which you can take all of the LGPS AVC tax free (based on the caveat you describe) is unique to that scheme...and that you /she could only take 25% of the NHS AVC tax free.

swindiff

It's not unique to LGPS. USS also allow you to take a tax free sum equivalent to 25% of the combined total value of the DB and DC parts of the pension. The value of the DB is calculated by multiplying the annual pension by 20.

PoorPaul

Thanks for the replies, that being the case with the Pru's NHS variety of the AVC it may not be the best option then. We were hoping to have the possibility of getting at it all as a lump sum (not that it'll be a huge one) so perhaps need to seek an alternative.

bluenose1

swindiff wrote: »

It's not unique to LGPS. USS also allow you to take a tax free sum equivalent to 25% of the combined total value of the DB and DC parts of the pension. The value of the DB is calculated by multiplying the annual pension by 20.

Thanks Swindiff, never realised that. Will definitely consider taking maximum tax free lump sum as will be above the personal tax allowance when I take my annual pension.