NHSP or SIPP

r2i

Hi All
Would like to get some honest views regarding 'pros and cons' of NHSP versus starting SIPP please?
I might be heading in wrong direction - apologies in advance
I've reached maximum PIA, & no carry forward left. Don't wish to pay AA taxes every year from now.
Instead was thinking to put similar monies in SIPP, if I am able to negotiate with employer ( to pay me full EEs &ERs) 
From 2022 onwards (McCloud/Seargent consultation)- all NHSP would go to 2015 scheme. I'm NOT keen to be part of this scheme as wish to retire well before 67yo.(due to lower male life expectancy in family=75yrs max- Sadly, lost my father this year.). His death has made me rethink my previous retirement plans . Earlier, I was thinking to retire at 60 but now  wish to stop working at 55yo (8yrs and counting).
The main  benefit of SIPP, which I see is that I'm able to pass it to next generation. I know rule change means may have to take at 57..
I would like to take NHSP at 55 with actuarial reduction.
Are there any pros and cons of stopping NHSP , and investing in SIPP instead?
I understand that volatility of market is one main drawback and may lose even 40-50% of value too as opposed to index linked pension.- but would it be cost effective if I've lower life expectancy?
Secondly, Life insurance and spouse pension of NHSP is very good.. I have recently taken good life insurance at reasonable cost. Spouse has fortunately her own DB pension so won't be worrying about her, if it makes sense!
I've taken paid advice from my IFA and she recommends me to stay in NHSP (and pay Scheme charges): Is it worth paying AA charges via scheme pays and reduce my actuarially reduced pension ''even'' further? I also worry about 2.8% + CPI scheme pay charges (compounded ) for 8-9rs. Hence thought to go for SIPP than NHSP.
My heart says to stay in NHSP and mind tells me to have SIPP.    Big Dilemma ..
May be I'm thinking of this due to bereavement and don't want to regret later.
I have seen lot of good advice already given by some expert members here. 
Could someone with good understanding of DB pension give me some pointers to help me make a decision please?
Thanks

Marcon

r2i said:

I've taken paid advice from my IFA and she recommends me to stay in NHSP (and pay Scheme charges): 
Could someone with good understanding of DB pension give me some pointers to help me make a decision please?

Yes. Your IFA. That's what you are paying her for. If you need further explanations/information/advice, she's the one who has a full picture of your financial affairs, attitude to risk etc. Nobody here does.

NottinghamKnight

Public sector DB schemes re not as good as they were, but they are far better than anything available to the vast majority of the population in private sector or personal schemes. Not sure if you are saying you have an annual/ lifetime allowance issue but there's nothing to stop you paying into a sipp as well as the nhs scheme if not. If you are hitting those limits then use of isas or gias could be used to plug a gap before taking pensions benefits.

hugheskevi

r2i said:

Instead was thinking to put similar monies in SIPP, if I am able to negotiate with employer ( to pay me full EEs &ERs)

I'd see what employer is willing to offer before doing much more thinking. If they won't, there is no decision to make. If they will give some form of payment in lieu of pension, then some real numbers can start to be used.

hyubh

r2i said:
I've reached maximum PIA, & no carry forward left. Don't wish to pay AA taxes every year from now. 

Presumably you're a doctor well into 6 figures? Otherwise I can't make sense of that statement - how would you be breaching the AA on an annual basis...?

if I am able to negotiate with employer ( to pay me full EEs &ERs)

'If'...? Not wanting to bash the IFA, but how could she come to a reasoned conclusion if you don't actually know whether the employer would be willing/able to adjust your pay like that? Seems pretty crucial to me.

From 2022 onwards (McCloud/Seargent consultation)- all NHSP would go to 2015 scheme. I'm NOT keen to be part of this scheme as wish to retire well before 67yo.

And so you could. Actuarial reductions are not intended to be penal, but make early and normal retirement (on average) cost neutral for the scheme.

I'm curious how exactly you have breached the AA already. If you're 47 now, then presumably you were moved into the 2015 scheme in 2015? In which case, until McCloud is actually settled, you have the final pay link for pre-2015 service + 1/54 CARE accrual and CPI+1.5% revaluation for service from April 2015. Did you have a big bump in 1995/2008 section pensionable pay...?

due to lower male life expectancy in family=75yrs max

Not saying they weren't, but were they all highly paid professionals too? Otherwise, is there something genetic that gives reason to assume you will die well short of the current average life expectancy of a man who reaches 65, not just an upper middle class male who reaches that age...?
https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/lifeexpectancies/bulletins/nationallifetablesunitedkingdom/2017to2019#life-expectancy-at-age-65-years-in-the-uk

Are there any pros and cons of stopping NHSP , and investing in SIPP instead?

To be blunt: if you have genuine tax reasons, and your employer is willing/able to facilitate it by paying you the NHS employer rate directly, seriously consider it. However simply opting out of the NHS scheme without a major upward pay adjustment would be a terrible idea, even with LTA charges down the line.

I also worry about 2.8% + CPI scheme pay charges (compounded ) for 8-9rs.

Not unreasonably so, other things being equal. But what is the likelihood of your final pay for final salary benefit purposes outpacing that? 

Not unreasonably so, other things being equal. However, assuming you have breached the AA mainly due to your final salary benefits, what is the likelihood of your final pay either keeping up with, or outpacing CPI+2.8%? If there is a reasonable chance, then that would be a reason to stay in the scheme (or rather, the scheme pays interest rate wouldn't be a reason to opt out).