Additional savings to NHS pension or Stakeholder pension

AgathaSquirrel

Lots of info above on ERRBO. This is not something I’ve looked into. I had assumed I wouldn’t touch my CARE pension until 67. I’ll look into it.

saucer

Unless I am mistaken about how ERRBO works (which is quite possible) it is a lot less useful for members who are likely to be having the significant part of their pension coming from the legacy (1995 or 2008) parts of the scheme (particularly given the McCloud ruling where many are better off remaining in that scheme until March 2022). ERRBO reduces the penalty for retiring before NRA on 2015 benefits only but is paid for through a  whole salary percentage increase in contribution. 

hugheskevi

AgathaSquirrel said:

https://pensions.gov.scot/nhs/your-membership/your-contributions/increasing-your-pension

This is where I took my information from but on rereading, I’m wondering if I’m an active member of the 1995 pension and if not, surely with the McLeod judgement I should be able to purchase extra until 2022?

Technically you are an active member of the 1995, but that was the case before McCloud judgment - due to the retention of the final salary link, you are active in both the 1995 and 2015 schemes.

Your 2015-22 service will not be put back into the 1995 scheme until a later date, probably 2023 or 2024. However, any 2015 scheme Added Pension or ERRBO you purchase before April 2022 will be converted into 1995 scheme Added Pension.

Unless I am mistaken about how ERRBO works (which is quite possible) it is a lot less useful for members who are likely to be having the significant part of their pension coming from the legacy (1995 or 2008) parts of the scheme (particularly given the McCloud ruling where many are better off remaining in that scheme until March 2022). ERRBO reduces the penalty for retiring before NRA on 2015 benefits only but is paid for through a  whole salary percentage increase in contribution. 

ERRBO only affect future accruals, so it doesn't matter whether a member has past service in other schemes or not.

Mathematically, ERRBO and Added Pension are almost the same thing, as they are based on the same actuarial assumptions. A member who pays ERRBO contributions to reduce the age from which an unreduced pension can be drawn would end up in almost the same position as a member who contributed the same amount to Added Pension to increase their pension, then drew the pension (with reduction) at the same age as the ERRBO member. There are some differences are survivor and ill-health benefits, so the position is not identical.

One potentially very useful difference however is that ERRBO does not generate a pension input whereas Added Pension does - which could be useful for those facing Annual Allowance issues.

adamcarvell

AgathaSquirrel said:

@adamcarvell why do you want to transfer into the standard life stakeholder pension? I’m looking to add to mine, rather than transfer.

well ive got my nhs pension and two DC pots and a lump sum im thinking of opening a sipp putting them all in that or if the nhs stakeholder pension is better i may do that but cant find much information about it. im in the 2015 pension only.

AgathaSquirrel

adamcarvell said:

AgathaSquirrel said:

@adamcarvell why do you want to transfer into the standard life stakeholder pension? I’m looking to add to mine, rather than transfer.

well ive got my nhs pension and two DC pots and a lump sum im thinking of opening a sipp putting them all in that or if the nhs stakeholder pension is better i may do that but cant find much information about it. im in the 2015 pension only.

Ok, you are in a slightly different position to me. This is the stakeholder pension I have: https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension/stakeholder-pensions

I’m no expert, others will be able to advise you better than I can. I think with the stakeholder it comes directly from your pay which might provide some benefit?

adamcarvell

AgathaSquirrel said:

adamcarvell said:

AgathaSquirrel said:

@adamcarvell why do you want to transfer into the standard life stakeholder pension? I’m looking to add to mine, rather than transfer.

well ive got my nhs pension and two DC pots and a lump sum im thinking of opening a sipp putting them all in that or if the nhs stakeholder pension is better i may do that but cant find much information about it. im in the 2015 pension only.

Ok, you are in a slightly different position to me. This is the stakeholder pension I have: https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension/stakeholder-pensions

I’m no expert, others will be able to advise you better than I can. I think with the stakeholder it comes directly from your pay which might provide some benefit?

ive read it can be direct from pay or by direct debit.

adamcarvell

adamcarvell said:

AgathaSquirrel said:

adamcarvell said:

AgathaSquirrel said:

@adamcarvell why do you want to transfer into the standard life stakeholder pension? I’m looking to add to mine, rather than transfer.

well ive got my nhs pension and two DC pots and a lump sum im thinking of opening a sipp putting them all in that or if the nhs stakeholder pension is better i may do that but cant find much information about it. im in the 2015 pension only.

Ok, you are in a slightly different position to me. This is the stakeholder pension I have: https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension/stakeholder-pensions

I’m no expert, others will be able to advise you better than I can. I think with the stakeholder it comes directly from your pay which might provide some benefit?

ive read it can be direct from pay or by direct debit.

I've read that link but the information is very vague not much infomation i wonder if anyone has experience of joining the stakeholder ?. 

AgathaSquirrel

I only have the option of salary sacrifice for the stakeholder. I think may be direct debit for lump sums. My original payment is direct debit but I think they changed it. Salary sacrifice I think is better.

AgathaSquirrel

hugheskevi said:

AgathaSquirrel said:

https://pensions.gov.scot/nhs/your-membership/your-contributions/increasing-your-pension

This is where I took my information from but on rereading, I’m wondering if I’m an active member of the 1995 pension and if not, surely with the McLeod judgement I should be able to purchase extra until 2022?

Technically you are an active member of the 1995, but that was the case before McCloud judgment - due to the retention of the final salary link, you are active in both the 1995 and 2015 schemes.

Your 2015-22 service will not be put back into the 1995 scheme until a later date, probably 2023 or 2024. However, any 2015 scheme Added Pension or ERRBO you purchase before April 2022 will be converted into 1995 scheme Added Pension.

Unless I am mistaken about how ERRBO works (which is quite possible) it is a lot less useful for members who are likely to be having the significant part of their pension coming from the legacy (1995 or 2008) parts of the scheme (particularly given the McCloud ruling where many are better off remaining in that scheme until March 2022). ERRBO reduces the penalty for retiring before NRA on 2015 benefits only but is paid for through a  whole salary percentage increase in contribution. 

ERRBO only affect future accruals, so it doesn't matter whether a member has past service in other schemes or not.

Mathematically, ERRBO and Added Pension are almost the same thing, as they are based on the same actuarial assumptions. A member who pays ERRBO contributions to reduce the age from which an unreduced pension can be drawn would end up in almost the same position as a member who contributed the same amount to Added Pension to increase their pension, then drew the pension (with reduction) at the same age as the ERRBO member. There are some differences are survivor and ill-health benefits, so the position is not identical.

One potentially very useful difference however is that ERRBO does not generate a pension input whereas Added Pension does - which could be useful for those facing Annual Allowance issues.

So, I’m thinking I buy additional nhs pension as a lump sum by the end of this financial year and then pay additional monthly contributions to my stakeholder from April.

hugheskevi

adamcarvell said:

well ive got my nhs pension and two DC pots and a lump sum im thinking of opening a sipp putting them all in that or if the nhs stakeholder pension is better i may do that but cant find much information about it. im in the 2015 pension only.

A Stakeholder pension and a SIPP are at opposite ends of the pension spectrum, with a Stakeholder pension being intended for inexperienced investors (and nowadays not really used except for niche situations) whilst a SIPP is for those who want to manage all their investments themselves. It is surprising you are choosing between the two, and not including personal pensions, for example.

I'm very suspicious of employers who have not updated their DC provisions in many years and still offer Stakeholder pensions. For example, the NHS Stakeholder charges 1% and offers a discount, which was said to be 0.4% earlier in the thread. Whereas the more modern Civil Service AVC Mastertrust has a charge of 0.3% - so the cost is half the amount of the NHS Stakeholder, even after the discount, and is a much more modern pension arrangement.

I’m no expert, others will be able to advise you better than I can. I think with the stakeholder it comes directly from your pay which might provide some benefit?

I think the contributions are via net pay. This doesn't have any benefit over relief-at-source contributions, it is just a different way of reaching the same end outcome.

I only have the option of salary sacrifice for the stakeholder. I think may be direct debit for lump sums. My original payment is direct debit but I think they changed it. Salary sacrifice I think is better.

I don't think it is salary sacrifice, but net pay arrangement, which is a different thing to salary sacrifice.