NHS Transfer in advice

hugheskevi

wannabe_a_saver said:

hugheskevi said:

The key comparison is the £11,602.57 DC pot against the pension credit you get. Applying the April 2020 pension increase of 1.7%, the amount of annual pension you would get seems to be £837.46 p/a from age 68 (with CPI increases from April 2021, the first increase being 0.5%). That is a multiplier of 13.85.

How good that is depends on your age - if you were 65 it was be amazing. From other details given, you are probably in your 30s. I'd say it was still good, especially as you can build up DC pension anytime, whereas DB is largely limited to public sector now.

Thank you, I'm 36.  So the NHS pension is DC?  Would you accept the offer and transfer in?

NHS pension is DB.

Looking at the cost of Added Pension for a 36 year old, you can purchase £1,000 of Added Pension for £9,440. That leads me to wonder if the transfer-in would increase by CPI, or by CPI+1.5% like main scheme pension (may be worth confirming with scheme administrator), as I would have expected the cost of Added Pension and the transfer-in value to be closer in value.

Having a mix of DB and DC is, generally speaking, a good idea - DB gives certainty, whilst DC gives flexibility, the strengths and weaknesses of each type are almost exact opposites, so it is very good to have both.

If Added Pension was cheaper than the transfer-in, I would be much less inclined to transfer, as if I wanted more pension I could increase the NHS pension with Added Pension.

An inflation linked annuity of £116,000 with 50%widows benefits would pay about £4k per annum and you are being offered £823pa for £11,600, is one way of looking at this. 

You need to be careful to compare like-with-like. The annuity is based on an individual aged (presumably) 68 today with a pension pot of £116,000

The transfer-in is based on a 36 year old. That leaves 32 years of growth (in excess of CPI) to account for in the comparison before it is a like-for-like comparison.

german_keeper

Nobody can or should tell you definitively what to do. I think the biggest issue is the timescale as you say you returned to the NHS "early last year" and another poster suggested you have 12 months to make your decision. And you admit that your understanding of pension leaves a bit to be desired. 

All the public sector schemes are excellent (it makes up for the crap wages!!) and I think ordinarily it would be wise to transfer in. But I agree completely with hugheskevi that the combination of DB and DC (which both me and Mrs GK have) is ideal. If you have enough time before any deadline for your decision to get a better understanding of Defined Benefit and Defined Contribution schemes that would be a very wise use of your time.

The problem we had was that bringing up 3 kids on a relatively low household income meant that we had no extra income till we had paid off the mortgage when we were mid fifties. If you think you may have extra income at an earlier age that would help you to create the situation of having both a good DB scheme and the flexibility of a significant amount in DC provision.   

wannabe_a_saver

The 12 month deadline is to apply for the transfer in, which I did meet.  I’m not sure if there is a deadline on my decision as to whether to accept the offer. 

I would not be continuing to make contributions to the Aviva pension regardless.  It was set up by my previous employer, and as I already pay nearly 10% of my income (and I’m single so there is only mine) to the NHS pension I’m not looking to pay in more at the moment. 

wannabe_a_saver

I think I'm going to go for the transfer.  If nothing else its at least simpler to have everything in one place!