NHS v LGPS

edrushuk

I am 52 and looking to a moving roles.  As well as wage & conditions, company pension scheme is high on my list of considerations.   So I am wondering which has the best pensions scheme - NHS or Local government?  I have a small pension pot worth about £80k and 4 year contribution to a NHS Pension from my current role. The roles I will be applying for will be salaried around £30K
Thanks

Andy_L

Difficult to compare. The NHS has a higher employee contribution and accrues at a lower rate, but it then revalues at a higher rate. "Best" is going to very dependent on your own circumstances.  

Contribution rate (at £30k salary)
NHS: 9.3% LGPS 6.5%
Accrual Rate
NHS:1/54th (~1.9%) LGPS 1/49th (~2.1%)
Revaluation rate
NHS: CPI + 1.5% LGPS: CPI  

JoeCrystal

Oh, what such a lucky position to be. 

Starting from scratch (ignoring your four years contribution) and on £30k and assuming you want to retire at 67 aka SPA and assuming that CPI increase will match the payrise and so on:

NHS: 1/54th of the earnings and revalue CPI+1.5% (£555.55 per year)
LGPS: 1/49th of the earnings and revalue only at CPI (£612.24 per year)

In 15 years, you would build up the following benefits in today's money:
NHS: £9,267 per year
LGPS: £9,183 per year

As it is similar in term of pension, it may be worth looking at the contribution rates, which is dirt cheap for such extremely generous benefits.

NHS: 9.3% / £2,790 per year or £232.50 per month
LGPS: 6.5% / £1,950 per year or £162.50 per month

I would say that LGPS is more generous.

edrushuk

"Best" is going to very dependent on your own circumstances.  

 What circumstances should I be thinking about?  Thanks for the info

edrushuk

Joe Crystal that is very helpful.  I will keep that in mind. Thank you

Silvertabby

Overall, they are both much of a much.  In this case, I would concentrate on the job (security, enjoyment, etc) rather than the benefits.

edrushuk

Thank you SIlverTabby, It will be easier to stay where I am and apply for roles here, since I have already built up relationships.  And whilst no job is secure, I feel i have more security within the NHS than the local government, that seemed to have got battered during austerity. 

Andy_L

edrushuk said:

"Best" is going to very dependent on your own circumstances.  

 What circumstances should I be thinking about?  Thanks for the info

How long you are going to be there? ie will the higher revaluation in the NHS outweigh the lower accrual & higher contribution rates?

Is your career path going to take you into a higher contribution band sooner in one or the other

Do you want to retire early? How do the schemes differ in reduction if you do

Lummoxley

Another thing to think about is whether you want to exchange the £80k for additional yearly pension. If you did change to LGPS, i.e. move to a new scheme, it may be worth getting a quote on what that would buy you straight away as many operate a 12 month time limit on transfers in. The main caveat to this approach is that if you want to retire before the scheme age there are fairly hefty reductions. 

edrushuk

Andy_L said:

edrushuk said:

"Best" is going to very dependent on your own circumstances.  

 What circumstances should I be thinking about?  Thanks for the info

How long you are going to be there? ie will the higher revaluation in the NHS outweigh the lower accrual & higher contribution rates?

Is your career path going to take you into a higher contribution band sooner in one or the other

Do you want to retire early? How do the schemes differ in reduction if you do

I plan to stay with NHS England for the rest of my working career, so 67 if they will keep me, maybe going part time if I can pay of the mortgage by 60.  I dont think i will be hitting the higher tax rate but sticking around the £40 - 45k region.  I will see if i can work some figures.  Thanks again. 

edrushuk

Lummoxley said:

Another thing to think about is whether you want to exchange the £80k for additional yearly pension. If you did change to LGPS, i.e. move to a new scheme, it may be worth getting a quote on what that would buy you straight away as many operate a 12 month time limit on transfers in. The main caveat to this approach is that if you want to retire before the scheme age there are fairly hefty reductions. 

I would like to access some of the £80k at 55 just to help me get the mortgage paid off at 60.  Looking at everything i think there are small gains with both pensions but nothing drastic, so will remain with NHS as it allows good career progression.  Thanks for your help.