NHS Pension Question

[Deleted User]

I'm band 5 nurse paid £25,424.64 pa.  I have only had this band for the last 3 years.  Previously I've been bands 2, 3 and 4.  Have been employed since 2005 in various roles.  If fall into 2 schemes - 1995 and 2015.   In the 1995 scheme I have 8 years 293 days reckonable days (£2797.58).  That's now fixed and can't be changed.  In the 2015 scheme I currently have £76.11.   I'm 57.  I have no other income or savings other than my house.  I won't be going up a band either.  I contribute 7.10% to my pension as per my band and my employer contributes (I think about 20%).  I've no idea how much this will be when I retire or how to work out a projection.  It's supposed to be 1/54th of your pensionable earnings per year but there's an end of year revaluation figure which isn't fixed.  I'm considering overpaying but you have to do it in lots of £250.  I could do that every 2 months but is it worth it?  How do I work it out?    Or am I better to get a stocks and shares ISA?  I've tried contacting NHS pensions but they are not helpful in the least so far.  What do you all think?  

Dazed_and_C0nfused

In the 2015 scheme I currently have £76.11. 

I find that hard to believe.

In the 2015 NHS scheme a year with pensionable earnings of £25,424.64 would accrue a pension of £470 (before any revaluation).

If you continued on this salary for the next ten years you would accrue a further £4,700 (before any revaluation).  Assuming the 2015 pension continues unchanged. 

In the 1995 scheme I have 8 years 293 days reckonable days (£2797.58).  

Is the £2,797.58 the pension from your latest statement?  If so is that based on the salary of £25,424?

TVAS

I think you should write to them send it recorded. When they mess it up complain. When they come back with some lame rubbish send it to the Pensions Ombudsman. 

The people on the phone don't know anything. 

I don't think you can do a regular contribution every two months. Check. Lets say you can you need 2 quotes to your scheme retirement age one as per now and the other with these additional contributions.

It depends on if when you are retiring because investing into an ISA needs a timespan longer than 3 years. Also if you have never had a stocks and shares ISA at age 57 are you willing to take a risk because you seem to have not done so in the past. 

Others will reply to you with a detailed answer on the NHS scheme but I would still get 2 retirement quotes from them.

[Deleted User]

Dazed_and_C0nfused said:

In the 2015 scheme I currently have £76.11. 

I find that hard to believe.

In the 2015 NHS scheme a year with pensionable earnings of £25,424.64 would accrue a pension of £470 (before any revaluation).

If you continued on this salary for the next ten years you would accrue a further £4,700 (before any revaluation).  Assuming the 2015 pension continues unchanged. 

In the 1995 scheme I have 8 years 293 days reckonable days (£2797.58).  

Is the £2,797.58 the pension from your latest statement?  If so is that based on the salary of £25,424?

That's exactly what my total rewards statement says as of today.  For 1995 scheme - no that's not based on £25,434.  I've only been band 5 for 3 years.  Before that I was assorted bands initially starting on 10 hours a week so the hours varied also.  

[Deleted User]

TVAS said:

I think you should write to them send it recorded. When they mess it up complain. When they come back with some lame rubbish send it to the Pensions Ombudsman. 

The people on the phone don't know anything. 

I don't think you can do a regular contribution every two months. Check. Lets say you can you need 2 quotes to your scheme retirement age one as per now and the other with these additional contributions.

It depends on if when you are retiring because investing into an ISA needs a timespan longer than 3 years. Also if you have never had a stocks and shares ISA at age 57 are you willing to take a risk because you seem to have not done so in the past. 

Others will reply to you with a detailed answer on the NHS scheme but I would still get 2 retirement quotes from them.

The people on the 'phone are just awful - combined with my lack of knowledge it's not a good combination.  My retirement age is 67 so I've got 10 years to go.  I'm afraid this is where divorce can lead but we are where we are and I have to make the best possible use of the time and money available.  My maths is appalling and I think if I were able to pay £250 every 2 months then 1/54th of that for the year is about £27 so not helpful really and there's no point if it doesn't help me.  If not this, then I need something else.  It's shockingly hard to get to the bones of the matter.  

Dazed_and_C0nfused

Beremy said:

Dazed_and_C0nfused said:

In the 2015 scheme I currently have £76.11. 

I find that hard to believe.

In the 2015 NHS scheme a year with pensionable earnings of £25,424.64 would accrue a pension of £470 (before any revaluation).

If you continued on this salary for the next ten years you would accrue a further £4,700 (before any revaluation).  Assuming the 2015 pension continues unchanged. 

In the 1995 scheme I have 8 years 293 days reckonable days (£2797.58).  

Is the £2,797.58 the pension from your latest statement?  If so is that based on the salary of £25,424?

That's exactly what my total rewards statement says as of today.  For 1995 scheme - no that's not based on £25,434.  I've only been band 5 for 3 years.  Before that I was assorted bands initially starting on 10 hours a week so the hours varied also.  

If you didn't have a break in service then I thought that's exactly what the 1995 scheme would be based on, your salary at the point you come to retire and take the 1995 element.

The number of hours you work is irrelevant for final salary purposes, it is the full time equivalent salary that is used.  Being part time limits how many years you have accrued, for example you might have worked 20 years to get your 8 years 293 days reckonable days.  But the pension for those 8 years 293 days is based on your final salary.

Andy_L

Beremy said:

  My maths is appalling and I think if I were able to pay £250 every 2 months then 1/54th of that for the year is about £27 so not helpful really and there's no point if it doesn't help me.  If not this, then I need something else.  It's shockingly hard to get to the bones of the matter.  

Beremy said:

I'm considering overpaying but you have to do it in lots of £250.  I could do that every 2 months but is it worth it?  How do I work it out?    

With the Additional Pension scheme you buy additional pension in lots of £250, you don't pay extra contributions in lots of £250. ie you increase your pension when you retire by £250 and you can either pay for that with a lump sum or monthly payments. 

A quick play with the calculator estimates either £53/month until you retire or a lump sum of £3750 for £250 of pension

https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension/additional-pension

GingerJim

Nothing in pensions is straight forwards. The NHS Pension is even more complicated.

I’ve tried to do a simple map of your situation based on the info given, and on some guesses (guesses of what your pensionable pay has been since 2015).

1995

You have 8.8 years in the 1995 scheme. For the sake of argument that equates to an annual pension of £2,797 if your salary is £25,424. As your salary increases [hopefully] with inflation and maybe you go up the increments within band 5, this amount will increase to a small amount. As far as I’m aware you can’t now add anything to the 1995 scheme, so that is fixed.

2015

I’ve calculated, without factoring in the revaluation factors, that as of 2021 your 2015 annual pension would be £2,749. There are significant reductions if you take your 2015 pension earlier and I’ve tried to factor these into the last column in yellow which shows what your total annual NHS pension would be if you retired at the corresponding ages on the left. If you fully retired at 60, your annual pension would be in the order of £5,501. If you stayed full time on the same salary until age 67, your annual pension would be in the order of £10.253 in todays money.

You can buy additional chunks of £250 in the 2015 scheme. Using the calculator on the NHS Pensions website I’ve worked out if you were to buy an extra £1,000 of pension (meaning if you retired at 67 instead of getting £10,253 per year you would get £11,253 per year), you would have to cough up an extra £148 per month (pre-tax) between now and age 67, which is £18,000 in total. So if you think having an extra £1,000 a year for life in 10 years time is worth £150 a month now, then this is an option for you. There would be other ways to put aside £150 a month such as in a cash ISA, or stocks and shares or buy premium bonds etc, but these carry varying risks both in terms of losing your money, and also potentially not growing as interest rates are likely to be poor for the next ten years I would have thought. If you put it in a cash ISA, it might not grow, so at age 67 you would have the original £18,000 in there. You could take out £1,000 a year to supplement your pension. As long as you lived for 18 years past the age of 67, I don’t see there is vastly much difference between buying more pension or putting the money elsewhere. The only difference is that you would be committed to paying £148 to the pension scheme EVERY month whereas you could decide not to invest in your ISA say one month if you were short of cash. The other side of this is you are likely to not commit to investing EVERY month, so at the end of the ten year period you probably wouldn’t have £18,000 in the ISA, but you might have had an easier and less stressful ten years.

State Pension

The other thing you need to think about is the state pension. A full one is now about £170 per week (£8,840 per year). I’ve no idea if you have enough qualifying years, but if you have only partial years in the last 6 years or so, you may be able to top these up to boost your eventual state pension. Again you would need to work out how much this may cost to see if it is viable for you.

Debts

As all the experts say, pay off your higher interest rate debts before investing money as the interest rates of debts are invariably higher than the interest rates on savings.

Support

It may be worth asking at work if there is someone who can help you with all of this. Else the Citizens Advice Bureau, or other free services. It really is very complicated.

2022/2023

It is likely that in 2022/2023 the NHS Pension scheme will change again. The things I’ve heard voiced are that we may be given the option to decide if we want the years between 2015 and 2023/2023 to either count in the 2015 scheme OR in the 1995 scheme. Apparently we won’t need to make that decision until we actually retire. Again doing a VERY quick calculation of this, it seems you would be £1,000 a year better off when you retire at 67 if you keep those years in the 2015 scheme compared to opting to move them to the 1995 scheme. If you wanted to retire at age 60 the reverse would likely be true…

It is all very complicated and I’m no expert so please do not base any decisions on what I’ve said and seek professional advice.

James

Additional pension calculator: http://www.nhspensions.nhsbsa.nhs.uk/PensionCalculators/AdditionalPension/index.aspx

 

hugheskevi

When making plans, you also need to consider the McCloud judgment and how it affects you, permitting you to have remained in the 1995 scheme for all of your service to 2022 if you wish.

Nurse2047

I buy additional NHS pension each month - or you can pay extra from your salary into a NHS AVC and you don't have a £250 minimum payment. https://www.pru.co.uk/rz/nhs/

saucer

GingerJim said:

Nothing in pensions is straight forwards. The NHS Pension is even more complicated.

I’ve tried to do a simple map of your situation based on the info given, and on some guesses (guesses of what your pensionable pay has been since 2015).

.....

I really hope the OP comes back to see the effort you have made there. That’s a lot more useful than anything NHS pensions would tell them (at least based on my experience)