NHS Pension Advice Needed Please

[Deleted User]

I am late to the pension table for a number of reasons (divorce mainly) and I’m ashamed to say I am bit stupid in this area. I am 57.  I can retire when I’m 67.   I earn £23619.00 pa.  Top of my band is 28K but it will take me almost 10 years to get there.  My NHS pension forecast at the moment stands at £2222.29 pa because although I’ve been there since 1995 the reckonable membership is 7 years 352 days.  Until next year when I’ve paid off my mortgage I can’t increase my contributions. 

My questions are:

1.  If I increase my contributions next year how much does my employer match it by (if at all). If they don’t is there any advantage to paying more in?

2. I have a lump sum of 7K.  Should I put that into the pension fund? 

3. I have 27K in premium bonds – would I be better to pay that into my pension fund or leave it in the bonds? 

83705628

No shame in it, we all have to start somewhere, it's never too early or too late (I'm 26!). If you are new to all this, consider the Pensions Advisory Service, or speaking to your union, contacting the pension scheme directly or the pension officer in your workplace.

1. There are a few different options to increase your contributions (https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension). If you want to increase the annual pension, that is called buying Additional Pension and there's a calculator you can you use to work out how much it would cost (https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension/additional-pension). I think the consensus view from the forum would be that it's a good deal.

I couldn't offer an answer to 2 and 3, i.e. what is the lump sum? Is it some cash that you have just come into or is it part of your pension benefits? As for the £27k premium bonds, it's always good to have savings and your post suggests you are thinking of making additional contributions out of your future salary anyway. Additional pension contributions are a good deal, but it's also good to have savings. You would need to work out for yourself the pros and cons of sacrificing savings for future income.
As an example I used the additional pension calculator to work out that if a 57 year old wanted to buy £250 a year extra income using a lump sum with no dependant benefits it would cost £3,550. It's better than commercial annuity rates. Note that's £250 from state pension age and before taxes.
Do not rely on what some stranger told you on the internet without knowing anything about you to inform this decision though.
Also I have that feeling I get when I'm wrong about something and someone else on the forum is about to tell me off!

crv1963

Hi OP- there's a couple of flaws in your thinking! 
1) Have you checked the increment tables? The new rationalising of the incremental points means that as a band 5 (an assumption of mine which may be mistaken) it should take only 7 years to reach top increment- I've copied a link from Unison below-
https://www.unison.org.uk/content/uploads/2019/03/25502.pdf
2) Is mortgage overpayments- if that is what you are doing may not be the best approach in the current low interest climate, maybe re-evaluate, but I understand and succumbed to the lure too of knowing the bricks and mortar was ours!
3) It is never too late to the pensions party!
Then you should consider the following-
4) You could contact your union to see if you can access free financial advice.
5) You could contact your Trust Pension Officer- number/ e-mail should be on the Trust intranet- discuss options (and cost) to increase pension benefits, buying additional pension could be an option and this could be from savings as tc93 figure suggest this may well be worthwhile, or it could be from ongoing earnings.
6) Not sure what your role is but if bank or overtime are available it may be worth taking on relatively regular additional hours and putting the earnings into an additional pension- there are lots of choices available, as these will be relying on stock markets you also then need to work out your stomach for risk.
7) Don't forget to work out what your income needs will be in retirement, how frugal you may or may not want to be.
8) Is there a partner/ significant other on the scene and what are their plans provision? 
9) Don't forget to include your SP in your calculations.
10) If you have things that reduce future pension such as Lease Car consider getting a really low cost option next time or your own car, costs and options really can make a difference to pensionable pay!

Good luck.

infj

Beremy - are you misreading your pension statement? There is no way your pension can only be £2000 approx if you have been in since 1995 - unless you re only working 1 hour a week!!
Have you missed that there are now 2 statements on NHS pensions - the one pre approx 2015 when it was the final salary scheme and the one since when it became a yearly accrural scheme?
There are reported on entirely seperately.

ljmascarenhas

What is the impact of the salary sacrifice car lease scheme on the 2008 nhs pensions scheme if i'm within 3 years of retirement please?

saucer

ljmascarenhas said:

What is the impact of the salary sacrifice car lease scheme on the 2008 nhs pensions scheme if i'm within 3 years of retirement please?

https://www.nhsbsa.nhs.uk/sites/default/files/2017-03/Key%20Notes-2008%20Section%20Estimates%20%28web%29-20161122-%28V2%29.pdf

It has a direct impact on ‘reckonable pay’. Your payment for the car reduces the salary on which your pension (for the rest of your life) will be based. The pdf above summarises how this works, but in essence your pension will be calculated using the average of the best 3 consecutive years in your last 10, which are usually your last 3. That average will be reduced because it is calculated on salary after the car payments have come off. This is different to how the pension is worked out in the 1995 scheme.