NHS Retirement and carrying on working- NEST vs SIPP

crv1963

I'm due to retire end of the month (April 2020), 1995 NHS Scheme Member, Special Officer status, have got to 42/80ths membership. So far so good, put my retirement pension papers in end January, due to retire end April. Had planned either retire and return part time at 0.5 WTE so not being hit by automatic pension reduction, or retire and work Agency so have no penalties imposed. I planned retirement date to ensure some commitments, mainly using TFLS to clear mortgage and pay for some building work to be completed, so need the TFLS as re-mortgage not something we want to do, and we are part way through the building works, which although paid for (except the completion payment) have now stopped there are further works planned as we head to retirement. 

Then along came Covid-19, never saw likely scenario - Govt adjusted the rule book dramatically- new rules, can retire and ride off to the back garden and sit out until the world gets the all clear (not really an option as I personally cannot leave my colleagues in the lurch and feel I do not want to stop work entirely in any case), can defer retirement and under the existing rules continue to accrue pension to 45/80 (in my case work another 19 months to reach this due to the way the anniversary dates work) or I can retire, have a 24 hour break in service then return to my current post with my status (pay grade and salary scale and hours) intact, keep my current training/ mandatory certificates intact.

If I retire and return with the 24 hour break as I retire from the 1995 scheme I cannot rejoin the NHS scheme. I would be enrolled into NEST automatically as it is my employers choice of pension for those unable to join the NHS scheme. I would be allowed to work part time, full time or full time plus additional hours (overtime or bank shifts as needed by the service). My base salary will be/ is currently £18 per hour, but shift enhancement takes this to £24 per hour and on Sunday/ Bank Holiday £30 per hour. I personally do not want to leave the post I have and walk away from my role at the current time, but I do need to clear the mortgage and have a decent sum put aside for the future. We have emergency fund and around 6 months of outgoings saved.

My understanding is I can either increase my contribution to NEST- awaiting information if this can be an increase in the percentage through payroll or if I need to make additional payments independently from take home pay. Or I can pay into NEST through payroll and set up a SIPP Pension. My plan was/is to save enough into a second or third pension to then draw down at the same rate annually as my SP will be when I hit age 67- currently 56 nearly 57. I have an Utmost AVC which I will need to transfer somewhere else - likely a SIPP as if I draw it I will fall foul of the 4k pa limit on contribution to a pension scheme.

I estimate that I could potentially save around 20k pa over the next 3 years, into a pension wrapper, so have a "pot" of around 60k to draw against between stopping work completely and hitting SPA. With wage and pension coming in I would hit HRT bracket by some 15k pa based on current earnings (earnings plus pension= 63+k), we are currently saving 200pm into Mrs CRV SIPP but intend increasing this to 80% of her take home pay, so around 1k pm.

As I plan saving into NEST/ SIPP I appreciate the markets could fall further/ take a long time to recover I am aware that I may not be able to draw the amount I had planned over the course of time before my SP starts, but my question is really - Am I better putting additional savings into NEST, high fee going in low fee longer term or SIPP- probably VLS 80 given I am half keeping an  eye on leaving it untouched if the markets drop further / take a long time to recover? I am aware also that given the current situation I am limited with time to research in depth and that no one has a crystal ball about the way Covid-19 will play out, the markets head or the tax changes likely to occur, so can only work with what we know/ have now.

zagubov

I like your options.
I can't solve your dilemma re: SIPP vs NEST but here's some thoughts.

How vital is your need for the TFLS? Unless your mortgage rate is very high, is it best to pay it off early?
The 24 hour rule for retirement and re-employment may not be available once you reach your NPA (is that 60 for you?).

Is there no way of re-enrolling on the NHS pension once you're collecting the pension? 

In my job (college lecturer) I took the 24 hour route, retiring a little bit early, put the TFLS aside and it's now my contingency fund (if the chimney falls down etc.). Was able to work full-time afterwards, still paying into the TPS, and now reducing my hours while paying off my mortgage at a low rate of interest.

In my scheme, as far as I can tell, if you don't take your pension as soon as you're entitled to it, you lose it. With all these plagues and outbreaks we've been putting up with, not sure I want to put off collecting it for too long. I've not met anyone that took a DB scheme a little bit early who's regretted it. Not investigated paying more into the pension tha currently am, but if I was still full-tome i would find that tax-efficient.

The happiest people in retirement are those that continue to work in a familiar role. It's fortunate for all of us that you're happy to continue in the NHS.

Dox

zagubov said:

In my scheme, as far as I can tell, if you don't take your pension as soon as you're entitled to it, you lose it. 

In many trust-based private sector schemes, if you do not claim your pension for six years, then you lose your automatic right to payments which are at least six years overdue. This is on a month by month basis - future payments aren't affected unless you still fail to collect!

crv1963

zagubov said:

I like your options.
I can't solve your dilemma re: SIPP vs NEST but here's some thoughts.

How vital is your need for the TFLS? Unless your mortgage rate is very high, is it best to pay it off early?
The 24 hour rule for retirement and re-employment may not be available once you reach your NPA (is that 60 for you?).

Is there no way of re-enrolling on the NHS pension once you're collecting the pension?

The happiest people in retirement are those that continue to work in a familiar role. It's fortunate for all of us that you're happy to continue in the NHS.

It is a nice dilemma! There is no vital need for the TFLS, but having spent the best part of 5 years planning it Mrs CRV and I are keen to try to fulfill some of the plan. The TFLS is a bit like a bird in the hand- I'd rather have it in the bank than the expectation that it will come. If I'm carrying on working then of course we can continue to pay the mortgage, bills and save as we have been.

We'll have to adapt quickly to the new circumstances- I've been asked to stay on in my roll, with likely more hours than my current full time and Mrs CRV has been asked if needed will she work additional hours. Both of us said yes. 

My NRA is actually 55 so the changes are to the scheme- no longer limited to 16 hours per week after taking the pension, must take the 24 hour break but then straight back full time +. Scheme rules that 1995 members cannot re-join the scheme still stand so my Trust use NEST for those members,

My plan had been retire, return part time with my current Team and then work Agency with a different Team in a different Trust for a couple of years and build a pot to draw down between finally stopping work and starting State Pension. Pay extra into Mrs CRV pot so she too can draw the equivalent amount she would get at SPA.

I work with several retire and return staff- all do it because they like the roles and feel in their mid 50s they are too young to stop altogether. Most are increasing their hours as the needs of the service dictate. I do have other friends and former colleagues who have retired completely- most love being stopped altogether, but again some are answering the call for former Nurses to return.

I think I'll just go with the NEST and SIPP dual option- put the maximum I can via work into the NEST scheme and the rest via a SIPP. Bank any extra into savings. I must say as an aside I had more cash in my account at the end of the month than usual since the new restrictions on going anywhere came into force.

I stand in my Mothers' garden and talk with her as opposed to taking her anywhere. My garden is on my days off getting more attention and my local Nursery has started deliveries rather than see their whole stock be thrown away. In fact they are so new to the delivery idea that they made a plea via FB for people not to ring or message as they had so many orders to complete. But I hope they manage to stay in business as they were established in the 1950s.

Albermarle

If you consider that NEST is 1.8% on the way in and then 0.3% annually .
Against say Vanguard SIPP with VLS 80 = 0.37% 

Also have you had a look at the NEST investment options? Do you see one that suits you , or not ?