Retiring at 55 from Nhs. Take reduced pension at 55 or defer till 60?

eyeman1

I'm about to retire from the Nhs aged 55 and will no longer be working. My partner's income can support both of us so should I defer the pension till NPA of 60 or take the reduced pension at 55? I have 2 yrs on the 2015 scheme and 32 years on the 1995 scheme.
If I take my reduced pension now rather than defer it till the NPA of 60 how long will it take before the net increased pension from the deferred pension catches up with my reduced pension?
Thanks

Dox

eyeman1 wrote: »

If I take my reduced pension now rather than defer it till the NPA of 60 how long will it take before the net increased pension from the deferred pension catches up with my reduced pension?

Please give the figures for deferring until 60/drawing it early so someone here can do that calculation for you, remembering that of course inflation can't be predicted.

cisamcgu

It is a simple calculation to get a ball-park figure:
Amount of pension at 55 x 5 = "extra amount by taking early"
Difference between pension at 55 and pension at 60 = "Pension difference"

"extra amount by taking early" / "Pension difference" = "No. of years to break even"

However, the tax rate will complicate this since you pay more tax per year if you wait to take the pension, but pay it for longer if you don't, etc...

tacpot12

Don't forget that taking the pension early will also reduce the amount of the lump sum payable under the 1995 scheme. The rate of reduction is different for the pension vs. the lump sum. See:

https://www.nhsbsa.nhs.uk/sites/default/files/2018-02/Early%20Retirement%20factsheet-20180201-%28V4%29.pdf

As general advice, if you can delay claiming your NHS pension until you are 60, and have no health concerns, this will be the better value. You might also consider a half-way house, e.g. claiming the pension at 57 or 58. This means you will lose less money in the actuarial reduction (than drawing it at 55) but you will also have the money while you are young enough and fit enough to enjoy it.

Rheumatoid

Also if you do not defer you will be drawing a smaller sum to be index linked for the rest of your life.

Brilley

My OH did this as generally it is much better value to defer.
In the 95 scheme you will also get a higher lump sum if you can ford to wait. (The increase you will get in lump sum is more than if you took the (pension and..) lump sum early and let it accrue "interest" in a savings account).
Again all assumes you can fund the gap and don't have any major health problems..

getmore4less

With the 95 scheme being the best of the last 3 years if you get variable pay due to enhanced rates then timing the month you finish can impact the pension.
with planning you can boost the pension by quite a bit.

nigelbb

As with all these pension deferment or take early pension questions what we really need to know is when you plan on dying.

eyeman1

Hi
1995 scheme
Pension from March 2017=£17404.14 per year

2015 scheme
Pension from March 2018 = £580 per year

Not sure why their calculations are give different dates?

So planned early retirement at 55 would be Oct 2019
Retirement at 60 would be Oct 2024

Thanks for any help.

Korkyb

Not sure where you are located but I used the "Scottish NHS Pension Scheme Calculator" (I think the pension scheme is the same but I'm sure someone will say if it doesn't work for NHS England / Wales).


https://pensions.gov.scot/nhs/your-membership/calculators/nhs-pension-calculator


Enter all the details then play around with different retirement / taking pension dates to see what you get if taking it at 55, 56, 57, 58, 59 or 60 then working out the time to "break even" using the info in post 3.


If I remember correctly for me it was around 14ish years to break even if I retired at 55 so:


- If I croak before 69 then I will be quids in and up on the deal :-) .......but unfortunately dead :-(


- If I live well past 70 then I will be financially down on the deal :-( ......... but I'd still be kicking :-)


Bear in mind that if you did live past 70 you should hopefully have your state pension by then so that financial boost would take away the disappointment of not being dead ;-)


As for me me, I'm Scottish & Male - only 0.0005% of us make it to 70 so I'm thinking that taking it at 55 sounds appealing!


The other factor to include is that you wont have had to work for whatever period of time you decided to retire from. The value of that may be priceless.

PoorPaul

Depends on your role but worth checking the below to see if it applies to you...

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