NHS Additional pension or SIPP when going part time?

Savernotspender

Hello,

My wife has worked for the NHS since university and has belonged to the pension since she started (she's now 40).

She has recently started working part time; 3 days a week instead of 5, and we're thinking about the best ways to maximise her pension. She's going to have an extra £500ish to pay into a pension. She currently also pays into a SIPP and a S&S ISA. It's massively unlikely that she'll be working until her NHS pension age of 68, we're thinking more 55/60 for her.

I was thinking about making up the difference between her full time NHS pay and her part time NHS pay by buying Additional Pension; is there a way I can work out how much this is? eg. 1/54 of £F/T - 1/54 of £P/T = the amount extra to buy a year? or is that being overly simplistic?

or the other obvious alternative is just to put more in the SIPP.

Does anyone have any views?

jamesd

A personal pension, SIPP or not, seems like the way to go because she can rapidly draw on the money between retiring and scheme normal pension age. That can reduce or eliminate the actuarial reduction for taking the NHS pension early by taking it later.

Do you get better tax or NI treatment of pensions than her?

It's also worth considering some small company investing via VCTs. These pay 30% initial tax relief capped at the tax otherwise due in the year of purchase. Has to be repaid if sold by the buyer within five years. This permits access before age 55 and 30% many times on the same money. The price paid being the greater uncertainties of the small companies used by the VCTs. This can join the ISA in the access before 55 segment.

As she approaches 55 it'll be sensible to move all of the ISA money into a personal pension to get the pension tax relief on it. Then back into ISA investments gradually from 55.

Personal pensions also benefit from 100% tax free inheritance before age 75, 100% tax free access if diagnosed as having no more than twelve months to live at any age and the ability to draw at a higher or lower rate depending on how the life expectancy of the individual varies. And generally greater spending flexibility.

Savernotspender

Hi,

Thanks for your reply.

I think I'm moving towards paying into the ISA/SIPP as we'll probably want to spend more money in the earlier years than the latter.

I haven't thought about VCT's or moving the money between ISA & SIPP so I'll look into those.

Thanks v much!

ScoobyZ

I have an NHS Pension and will be opening a SIPP this year.

2 reasons is to top up to reduce a CTG bill from a property sale.

Also I want some flexibility to draw down money early to avoid touching my NHS pension early. Also aiming to get as much out tax free as I can and the SIPP will be empty well before my State Pension kicks in.