What to do about pension?

Jami74

I really don't know much about pensions and think I should be doing something. I am 45 with no property, no savings and no inheritance to come, so I feel that it is important to do something now.

The state pension on the government website says I am on track to receive the full state pension.

I have an NHS one too but I am fairly new to the NHS, work on the bank and only part time. My rewards statement says the pension is £1,140. Is that how much I'll get a year when I retire in addition to the state pension?

I've also just started working for an agency, so will be working less hours for the NHS (therefore contributing less to the pension).

I see there is an option to make additional NHS pension contributions. To buy £250 pension will cost me £2,770. Does this mean if I pay £2,770 now then I will get an extra £250 a year when I retire? It sounds like a big thing to pay now for such a small yearly addition. At the moment I don't think I could afford to do that more than once a year.

Is there another way to have a pension that isn't too complicated? Maybe I could pay £200 a month. Would it be better to have something separate to the NHS one?

Sorry for all the dumb questions, I've been avoiding it for a while because it all seems so confusing.

Dox

You really do need to read the paperwork you've got. Deciding you don't understand it (join the club!) and rushing to ask questions here does two things: confirms in your own mind that you aren't capable of 'understanding pensions' (you can certainly grasp the basics - give it a go) and runs the risk of getting the wrong answer here, because you think you've asked one question, whereas it might actually be another - or relate to another figure on the paperwork you've got!

If you want a chat to people who are experts at talking pensions in plain English, give TPAS a call (free, impartial and well informed and they won't try to sell you anything), with your pensions paperwork handy when you ring: https://www.pensionsadvisoryservice.org.uk

atush

Try getting more hours on the NHS, and less for the agency. Why arent you working full time? They need nurses

zagubov

Public Service pensions go some way to compensate for the sometimes modest salaries. It contains life insurance, and gets the employer to throw free money in (equivalent to up to about one seventh of your salary or thereabouts) and it's inflation-proof.

Are there major advantages to working through the agency rather than having a steady NHS post? I'm struggling to see what that offers you if it's stopping you accessing the pension.

On various discussions on these boards, people have suggested you'd have to squirrel about a third of your income away to achieve the equivalent of a public service pension.

Please, do look into this, and maybe consider whether it's worth changing your work to better access these benefits.

Albermarle

To buy £250 pension will cost me £2,770. Does this mean if I pay £2,770 now then I will get an extra £250 a year when I retire? It sounds like a big thing to pay now for such a small yearly addition.

I do not know enough about the NHS pension to make a specific comment.
However as a general comment if a company was offering a £250 pa pension in exchange for £2,770 , there would be a 10 mile queue around the block !
Like many people you are vastly underestimating the cost of paying pensions , which often pay out for up to 40 years and can be inflation proofed.
For example if you were to retire at 65 and the only pension funds you had were £2770 . If you tried to buy an annual pension with that , you would be offered somewhere between £100 and £150 pa .

Jami74

atush wrote: »

Why arent you working full time? They need nurses

I have been working on average over 40 hours a week and offer my weekends to the NHS to cover staff shortages and earn extra money.

I am not a nurse. Nurses aren't the only profession that the NHS is short of.

zagubov wrote: »

Are there major advantages to working through the agency rather than having a steady NHS post? I'm struggling to see what that offers you if it's stopping you accessing the pension.

Please, do look into this, and maybe consider whether it's worth changing your work to better access these benefits.

Thank-you so much for your advice. I'm on a zero hour contract with the NHS and it's looking like, due to people coming back from maternity/long term sick etc, that there would be less work for me. So I have taken a job through an agency which will enhance my experience/CV and put me in a good position to apply for the next suitable NHS job that comes up, hopefully early next year. The agency does pay more, which made me think I should be doing something pensiony with the extra. Meanwhile I remain on the bank and offer my weekends to them.

Thank-you for explaining it to me, I will explore my options carefully regarding the benefits of agency work vs NHS work.

Albermarle wrote: »

I do not know enough about the NHS pension to make a specific comment.
However as a general comment if a company was offering a £250 pa pension in exchange for £2,770 , there would be a 10 mile queue around the block !

Thank-you! From what you say it sounds like an excellent deal and better than starting a different private pension. I didn't know if it was a good idea to have more than one pension on the go in case something went wrong. I remember someone telling me a few years ago that they'd 'lost' their pensions.

nigelbb

NHS pension accumulates at 1/54 of your salary so in simple terms if your salary is £54K each year you work adds £1K to your pension. Earn £27K & it's £500. It's a sliding scale for contributions from 5-14.5% depending on your salary. If you are on £27K it's 9.3% & if you are on £54K it's 12.5%. It's effectively index-linked deferred salary & worth getting on for another 50% of your salary i.e. if your salary is £54K then the £1K pension drawn for 25 years is another £25K.

Albermarle

didn't know if it was a good idea to have more than one pension on the go in case something went wrong. I remember someone telling me a few years ago that they'd 'lost' their pensions.

I don't think the NHS pension is going to get lost , so as it is a better value pension than anything you could find independently then stick with that .

LHW99

There is one aspect that could be considered. If you aim to move to more NHS hours in the (relatively) near future, putting spare money into a DC pension outside the NHS one could allow you to retire a little earlier and use that pension up first, so you don't have to take the NHS one early and suffer what is called an "actuarial reduction" - where you get a smaller pension each year because they have to pay it for longer.
It wouldn't get you as large a pension as paying into the NHS one, if you plan to retire at the NHS normal retirement age though.

Jami74

zagubov wrote: »

Can you please edit your post (

Done.

But I really do appreciate everyones input. I don't have anyone in real life that knows about this stuff.

squirrelpie

Jami74 wrote: »

I remember someone telling me a few years ago that they'd 'lost' their pensions.

The way to avoid siuations like that is very simple. Be methodical and keep paperwork related to your pensions, as well as employment and tax. Mostly it will turn out to be useless, but there'll be an odd bit that turns out to be worth a lot. Certainly keep annual statements and at least a few of things like payslips. If you look at them and understand them when you get them, so much the better, but as evidence sometime years in the future they could be very valuable.