Opt out of NHS pension

fy12019

Hello Everyone,

I have read similar threads and I understand the NHS pension is great value for the amount you contribute, however my circumstances are slightly different.

I start work as a foundation year 1 doctor in August, and only plan on working in the NHS for 2 years, before ideally moving to Australia to continue working.

Has anyone been in a similar position to me, and what did you do regarding the NHS pension. Did you stay in the scheme or did you opt out?

I understand it is very difficult to transfer the pension to Australia due to new restrictions and since I am only in the UK for 2 more years, and pension benefits are traditionally seen in the longer term, would it generally make sense to increase my take home pay (roughly 27000 pounds) by opting out?

Sorry for the essay and thanks for any help! The NHS pension team are unable to give any advice due to legal reasons!

Silvertabby

If you accrue at least 2 years pensionable service then you will leave a small deferred pension. As things stand, you won't be able to transfer this to your new pension scheme in Australia, but it would sit (and grow in line with inflation) and will be available for payment from (currently) age 55.

Opt out - or leave with less than 2 years service - and you will only get back your own contributions less tax. Your employer's contributions (which are a heck of a lot more than yours) would be forfeit.

Just 2 years service on your salary would give you a pension of more than £1K per year for the rest of your life if taken from your normal retirement age (SPA) and so is not to be sniffed at.

JoeCrystal

I would stay in if I was you. You do not know what the future will bring, and you may find yourself staying here in the future. Besides, there are other benefits associated with the NHS pension scheme such as a death in service payment or ill health retirement. Likewise, you do not pay taxes on pension contribution so you might find your take-home pay to be much lower if you opt out.

OldBeanz

You should be checking your NI contributions out and making sure you have 10 years as well. It may all see trivial in the grand scheme of things but you might as well grab the money which HMG will give you in a pension in 40 years time.
2 years is a long time for things to change in your plans.

xylophone

only plan on working in the NHS for 2 years,

I knew a young man who was "only staying a year" with his employer.....he died "in harness" some thirty five years later...mercifully there was a DB pension for his widow to inherit.

andy001

NHS pension is good to continue as long as one is not affected by AA, LTA and threshold / tapered taxes.
Once any of these above issues, then the so called ''Gold plated pension'' may be not as good !!
One should consider taking life insurance to cover death in service and do some calculations with help of IFA to see feasibility of continuing.
My 2 cents!

nigelbb

fy12019 wrote: »

I have read similar threads and I understand the NHS pension is great value for the amount you contribute, however my circumstances are slightly different.

I start work as a foundation year 1 doctor in August, and only plan on working in the NHS for 2 years, before ideally moving to Australia to continue working.

You most probably will not get a choice. With less than two years of service your pension contributions will be automatically refunded to you after you leave under the terms of the NHS pension scheme.

Flugelhorn

xylophone wrote: »

I knew a young man who was "only staying a year" with his employer.....he died "in harness" some thirty five years later...mercifully there was a DB pension for his widow to inherit.

A lot of medical staff do come back to to work in the UK at some stage, though it is getting harder to do so than it used to be

hugheskevi

You most probably will not get a choice. With less than two years of service your pension contributions will be automatically refunded to you after you leave under the terms of the NHS pension scheme.

If this is a concern, during the first year of service you can open a Stakeholder pension (or any pension, but Stakeholder may well be appropriate) with a small amount, eg, £50 and transfer that into the NHS pension.

The transfer will buy a trivial amount of pension, but will mean the pension is no longer subject to the 2 year rule for preservation.

justme111

OP, can you guarantee that you will move away in 2 years to Australia?
Can you guarantee you will not come back working here?
Judging by the tone of your post your plans are quiet woolly. Even firm plans often do not work let alone woolly ones. One of benefits of having pension now is that with it being so early in your life if you dab into NHS work every 5 years it is going to be updated by further 1.5 % which would beef it up considerably over long time. Another is that your contribution rate is lower than for people with higher salaries for proportionately the same benefit. Besides if you get your contributions back if you stay less than 2 years they are not lost - seems no brainer to me.

atush

Join the pension, even if you work just 2 years.

On the other hand, not sure about the whole education bit. Costs a lot to train a doctor, and knowing you were leaving after just 2 years makes me wonder how much of that is now wasted.