Salary sacrifice and buying additional NHS pension

OldBeanz

My son left Uni 2 years ago and had a number of jobs and I spent a fair amount of time suggesting that if he had a job with SalSac then to jump in with both feet. He joined the NHS and had to be re-educated.
The NHS plan only appears to benefit top doctors who are hitting pension limits and can sooth the pain in a nice cheap car.

Langtang

With regard to buying additional NHS pension, how does that work?

My wife is retiring at the end of the year after 24 years - is there a way she can buy extra before leaving? How much would that cost & is it worth it?

JoeCrystal

Langtang said:

With regard to buying additional NHS pension, how does that work?

My wife is retiring at the end of the year after 24 years - is there a way she can buy extra before leaving? How much would that cost & is it worth it?

If you Google NHS additional pension calculator, there is one on NHS pension website that she can use 

Langtang

JoeCrystal said:

Langtang said:

With regard to buying additional NHS pension, how does that work?

My wife is retiring at the end of the year after 24 years - is there a way she can buy extra before leaving? How much would that cost & is it worth it?

If you Google NHS additional pension calculator, there is one on NHS pension website that she can use 

Excellent, thanks for that.

Lowtrawler

Langtang said:

JoeCrystal said:

Langtang said:

With regard to buying additional NHS pension, how does that work?

My wife is retiring at the end of the year after 24 years - is there a way she can buy extra before leaving? How much would that cost & is it worth it?

If you Google NHS additional pension calculator, there is one on NHS pension website that she can use 

Excellent, thanks for that.

In terms of "is it worth it". When you review the costs on the Calculator you will likely find that it costs around £13 to buy £1 of pension. Purchasing a CPI linked pension in the open market would likely cost over £30 per £1 of pension. As she is retiring soon, you will want to look at the lump sum option. You will be able to get tax relief using taxable income from the current year and the previous 3 tax years, but will need to submit a tax return.

One thing to watch out for is whether making the lump sum purchase and then taking a lump sum from the pension fund within 2 years could be seen as recycling (according to the NHS leaflet). I'm no expert on this area and so perhaps others could advise.

Drummerboy79

Hello folks. I’m just jumping on this as looking at a lease car with the NHS for my wife. 

I’ve been reading everything I can find about the possible loss in PENSION benefit so wanted to run my numbers past you:

looking at an EV for £335 a month- £4000 a year. 

Assuming annual averaged earnings of £40,000. 1/54th of 40000 is £740

After the lease taken off:

1/54th of £36000 is £666

So £74 of lost pension per year. 

£222 (over the course of a 3 year lease). 

To put that £225 back into the pension I can buy £250 AVC for a monthly payment of £90 for 3 years. 

I know additional voluntary contributions don’t attract the same 1.5% inflationary uplift so she would be slightly worse off. 

I’ve done the maths of the savings vs current car- depreciation, insurance, road tax, breakdown etc. also there will be significant saving on fuel thanks to our solar/battery system. 

I guess- I just want to know if the £250 of avc at £90 a month will (more or less) offset the loss of pension. 

Grateful for someone to check my maths!  

crv1963

Just to add something- my Trust offers both Salary Sacrifice and Net Pay payment for lease cars. I don't have one so don't know the details but some in the office were discussing this last week.  

Moonwolf

Could I suggest that you are asking the wrong question. “We don’t want it to affect her pension”

Instead of trying to replace the missing pension, just work out if you will have enough in retirement given when you want to retire. If you do then you might as well have the lease car.

If you don’t, then ask how what you might need to do to replace it. Additional pension? A SIPP or top up an old DC scheme? Work a year longer? Is it worth it?

I think you are tying yourself in knots trying to get an exact like for like which will be almost impossible.