NHS CARE Pension questions

gtat

Hello,
My wife joined the NHS CARE pension scheme approx. 18 months ago, working in an admin role. We have a couple of questions - we've researched online and read various documents, but the answers aren't entirely clear (to us, at least!).

1. My wife is currently on Statutory Maternity Leave - long story short, but she moved from a Surgery to a Hospital about 5 months before the baby was due (she informed them of this during the interview process!) and whilst the two pensions were linked up, unfortunately she was not entitled to any paid leave as she is now with a different employer (even though it is still NHS). So she is receiving the Government's 'Maternity Allowance' i.e. not any payments through her salary. We think this means she does not build up any pension for the entirety of her maternity leave, is this correct? Can she make payments now and for the remainder of her maternity leave so that she does build up her pension? (Note: She has also asked this question to her payroll, but is still waiting for a response).
2. After maternity leave, my wife has agreed to go back part time (3 days per week) instead of full time: This will revise her salary to approx. £12,600 from the current approx. £21,000. We assume that future annual pension build up is then based on the new part time salary, not the Full Time Equivalent? This was a bit unclear from the documentation we have read, but I think the FTE earnings may be in relation to previous NHS pension schemes, not the 2015 scheme that is relevant to her.

Very grateful if anyone has the knowledge or experience to clarify our understanding of the above!

Many thanks.

Dazed_and_C0nfused

2.  Yes, it is the actual salary that is relevant.

For example in a full year earning £12,600 she will pay £705.60 in pension contributions and accrue a pension of £233.33.

As NHS pension contributions are paid using the net pay method it may be worth her looking into applying for Marriage Allowance at some point.

That would reduce her Personal Allowance from £12,570 to £11,310 but her taxable income would only be £11,894 so she would end up paying tax of £116.80 (£11,894 - £11,310 = £584 x 20%).

In return you would get £262 knocked off your tax liability.  Obviously only worthwhile if you are paying at least £116.81 in tax 

MX5huggy

My reading of this is that she should of been given the option of continuing contributions at her own cost to give her pension as if she was at work and being paid. Whether you can sort it now, as I expect paragraph 2 was not complied with. 

https://www.nhsbsa.nhs.uk/sites/default/files/2018-09/Maternity%2C%20paternity%2C%20parental%20and%20adoption%20leave%20%2809.2018%29%20%28V5.0%29.pdf

Just to add to D&C’s reply the £233.33 (which can look rubbish compared with the £700 cost) is annual pension paid for life from retirement age (with the option of taking it early at a reduced rate) which is index linked before and after retirement so it will be a lot more by retirement. 

gtat

Great, thanks very much both. That is really useful. 

D&C - Thanks, that is a great point about marriage allowance. I am right on the cusp between BR and HR (£50k salary + approx 5%ish bonus), so that transfer of personal allowance would be beneficial. Would doing that affect our child benefit claim of getting my adjusted earnings below £50k in order to receive full child benefit?

MX5Huggy - yes, it is possible my wife missed (or ignored!) an email about the chance to continue contributing. Hopefully she can sort it now for the remainder of maternity, even if not retrospectively. I have a DB pension too (Alpha), so understand the way it works in terms of multiple 'blocks', but thank you for checking! 

MX5huggy

I don’t think moving the personal allowance helps with the child benefit because you have to start paying it back after £50k not the HR tax threshold which is £50270. You should look to make additional pension contributions either via your work scheme of a SIPP so that you keep all the child benefit.

https://adviser.royallondon.com/technical-central/pensions/state-benefits-pension-manuals/child-benefit-avoiding-the-tax-charge/

saucer

MX5huggy said:

I don’t think moving the personal allowance helps with the child benefit because you have to start paying it back after £50k not the HR tax threshold which is £50270. You should look to make additional pension contributions either via your work scheme of a SIPP so that you keep all the child benefit.

https://adviser.royallondon.com/technical-central/pensions/state-benefits-pension-manuals/child-benefit-avoiding-the-tax-charge/

Use the HMRC Child benefit calculator https://www.gov.uk/child-benefit-tax-calculator  to precisely determine how much you need to put into a SIPP to avoid the child benefit charge.  It is a straightforward process of inputting your income following any pension contributions (or similar) at source then you can put varying amounts into the box for pensions paid out of net pay (which is what a SIPP contribution would be). 

Sun-Is-Fun

You can also purchase additional pension if you want to boost it.

Dazed_and_C0nfused

D&C - Thanks, that is a great point about marriage allowance. I am right on the cusp between BR and HR (£50k salary + approx 5%ish bonus), so that transfer of personal allowance would be beneficial. Would doing that affect our child benefit claim of getting my adjusted earnings below £50k in order to receive full child benefit?

Sadly not, for the recipient Marriage Allowance has no impact on your taxable income, adjusted net income or tax rate, it simply knocks a fixed amount off your tax liability (£262 in the current tax year).

Although the transferror had a reduced Personal Allowance the recipient doesn't have an increased Personal Allowance, they get the tax deduction.

To be eligible you need to not be liable to higher rate tax.