Early retirement nhs

20yearnhsguy

Hi
I’m a 46 year old male - worked for the nhs for 20 years, currently earn about £75k and hoping to retire around 60 (mortgage will be paid off by then) rather than 67 which is the default.
Just looked into my pension for the first time (I know, I know) and I’ve got about £20k in my pension pot so far. I’m wondering the best way of working towards early retirement? Is it to overpay my nhs pension? Excuse my ignorance! genuinely no idea what my options are!

Browntoa

So your current estimate says £20,000 a year pension

JoeCrystal

20yearnhsguy wrote: »

Hi
I’m a 46 year old male - worked for the nhs for 20 years, currently earn about £75k and hoping to retire around 60 (mortgage will be paid off by then) rather than 67 which is the default.
Just looked into my pension for the first time (I know, I know) and I’ve got about £20k in my pension pot so far. I’m wondering the best way of working towards early retirement? Is it to overpay my nhs pension? Excuse my ignorance! genuinely no idea what my options are!

You going have to understand how the NHS pension scheme works for a start. Read up on the scheme booklets or website about it.

20yearnhsguy

Thx browntoa
Yes that’s right - I was in the 1995 scheme now in the 2015 scheme, looking at my total reward statement it looks like so far I’ve built up around £20000 pension per year if I stay til age 67. Looks like about £1000 will be added each year to this figure if I’ve read it right. But if I wanted to retire at 60ish, Im wondering how much I’d get - obviously much less. I had a go at the early retirement calculator - but maybe I need to pay for a projection (£75 I think). Basically I’m wondering if overpaying into my nhs pension from now til retirement is the most sensible option to enable early retirement at 60ish with a decent pension. just after general advice about initial steps to take as a total pension newbie!

Twoplus

The normal pension age for the 1995 scheme is 60 so you can take this pension age 60 without reduction. As you know you won't be able to take from the 2015 scheme without reduction.
You can buy additional pension in the NHS which is usually considered very good value, which will increase your yearly pension and is paid at the same time as your 2015 scheme.
Alternatively you can start your deferred contribution scheme, this money can be taken currently at age 55 and you have total control over how much you take out each year. However this money will be invested so there's a risk. You can also leave any that is left in you will.

GunJack

Just a rough stab....

age 40, pension so far £20k p.a.
accruing £1k per year service
est. pension @ age 60 £40k p.a.
minus approx. 33% actuarial reduction for early payment of pension to retire @60 £13.2k
approx. pension @ 60 £26.8k p.a.

none of this allows for how the pension is increased by CPI+whatever p.a., or payrises, promotions, etc...

edit - if at age 60 your 1995 scheme is paid unreduced, then the actuarial reduction above will be less (and confined to just the 2015 part), so higher pension p.a.

GunJack

p.s. taking the NHS pension early may be beneficial in LTA terms, so if you do look at a SIPP/Personal pension as well, just be careful your total pensions value won't breach LTA and cause other (tax) problems...

20yearnhsguy

Thanks both - really helpful
I’d forgotten about being able to take the 95 scheme pension at 60 - that’s about 14k as I recall - not a bad start, but not quite there yet
GunJack - that is v reassuring - those sums look roughly the same as my calculations - v helpful to know
I’m gonna try to work our how much more I’d need to contribute over next 15 yrs or so to increase my pension so it equates roughly to what I’d get at 67
First time using these forums - extremely helpful so far. I’m working out my spending and predicted spending in retirement now too from reading other threads

atush

Think about starting a PP/or Sipp. This is a DC pension which can be taken at age 55 (or in your case 60). You'll need to save up enough that you can use this pot to live on until your NHS pension pays out at 67.

While you can take your NHS pension at age 60, it will be reduced for taking it 7 years early. possibly reducing by around 35%. And if you are in good health and will live a long time thats a big reduction.

Alternately, if you are OK with reducing your pension at 60, then the DC pot can give you a TFLS, and addition ad hoc income when required.

MaxZorin

Google ‘McCloud Judgement’ as this will impact your 2015 scheme. Exactly how isn’t clear at present and won’t be for sometime. However it may result in a return to the earlier scheme.

20yearnhsguy

Thanks - Hadn’t really thought of a sipp but just looked into it a bit. I’m 46 now so and by age 60 I will have worked into the nhs for 35 yrs
One plan might be to -
Pay into a sipp for next 15 yrs or so
Retire at ?62 taking my sipp and 95 pension
Then at 67 take my nhs 2015 pension and state pension
What do you guys think of this plan? Obviously I will be looking into it in detail but do you think this is generally feasible?

Forgive my ignorance - one thing I don’t understand in my plan: by 62 I’ll have 35 years service in the nhs. If i retire at this age, but don’t collect my 2015 pension until I’m 67, will I still get the same pension as if I continued working until 67, or not?
Thx for any pointers