Pros and cons of coming out of NHS pension

Dazed_and_confused

Then there are load more who've paid in for their full career and now living a nice life with early or flexi retirement on the cards.

And have paid less tax to boot.

I wonder if those who leave because they cannot afford it realise they are also having to pay more tax for the privilege of not having a pension

zagubov

A lot of people who leave it "because they can't afford it" don't realise they can't afford to not pay into it.

nigelbb

NHS pension contributions are tiered depending on salary. Most every nurse will be paying less than 10% of gross salary some a lot less than 10%. It’s very shortsighted to opt out of an extra 40-50% of salary paid in retirement.

Pension contributions (before tax relief) (gross) from Scheme year 1 April to 31 March
1 Up to £15,431.99 5%
2 £15,432.00 to £21,477.99 5.6%
3 £21, 478.00 to £26,823.99 7.1%
4 £26,824.00 to £47,845.99 9.3%
5 £47,846.00 to £70,630.99 12.5%
6 £70,631.00 to £111,376.99 13.5%
7 £111,377.00 and over 14.5%

ggmf

nigelbb wrote: »

NHS pension contributions are tiered depending on salary. Most every nurse will be paying less than 10% of gross salary some a lot less than 10%. It’s very shortsighted to opt out of an extra 40-50% of salary paid in retirement.

Pension contributions (before tax relief) (gross) from Scheme year 1 April to 31 March
1 Up to £15,431.99 5%
2 £15,432.00 to £21,477.99 5.6%
3 £21, 478.00 to £26,823.99 7.1%
4 £26,824.00 to £47,845.99 9.3%
5 £47,846.00 to £70,630.99 12.5%
6 £70,631.00 to £111,376.99 13.5%
7 £111,377.00 and over 14.5%

I'm currently part time and fall into 3. above. It should be noted that pension contributions are based on full time annual salary, so whilst I am no where near the salary indicated, indeed I'm below the salary indicated in 1. I'm contributing 7.1%.

Andy_L

ggmf wrote: »

I'm currently part time and fall into 3. above. It should be noted that pension contributions are based on full time annual salary, so whilst I am no where near the salary indicated, indeed I'm below the salary indicated in 1. I'm contributing 7.1%.

the pension you gain is based on the full time annual salary as well though.

EDIT: Actually, I'm sort of wrong there.

The old, final salary based scheme uses the full time salary for calculating the pension (hence dropping to part time for the last few years doesn't devastate your pension). The new CARE scheme just uses what you got paid in the year

ggmf

Andy_L wrote: »

the pension you gain is based on the full time annual salary as well though.

A valid point that is often overlooked.

Brilley

..yes I wish all NHS employees would leave the scheme...it would save the taxpayer a fortune. (I would be keeping mine of course)...
..can't believe that anybody who is entitled to an NHS pension would ever consider giving it up....sheer folly...(unless independently wealthy....and even then why would you give up a good chunk of free money?)

Silvertabby

It's not just the pension you'd be giving up, it's the ill health, death and survivor benefits as well.

Many years ago a member of the LGPS opted out because he was getting married and needed the refund (had been in just under the 2 year vesting period) to pay for his wedding and honeymoon.

In his opt out request letter, he said that he would re-join as soon as he could afford to do so.

He never did.

A few years and a couple of children later, he was tragically killed in a RTA. Before she could be stopped, his HR manager called on his widow to assure her that she would receive a tax free lump sum of 3 times her late husband's salary in the next few days, followed by a pension for life for her and pensions for the children until they reached 18/ended full time education.

They didn't receive a penny.

nigelbb

ggmf wrote: »

I'm currently part time and fall into 3. above. It should be noted that pension contributions are based on full time annual salary, so whilst I am no where near the salary indicated, indeed I'm below the salary indicated in 1. I'm contributing 7.1%.

If you are full time & earning £26K/year then take home pay after deductions would be £1,645 including your pension contributions of around £120/month for an index linked pension of about £480/year. Given average life expectancy you will draw that pension for 20 years so receiving nearly another £10K in total on top of the £26K salary ie about 40% extra on top of salary. Obviously part time will be pro rata.