NHS Retirement + Pension advice please

PJM_62

My wife is soon to retire from her NHS nursing job.  Age 55 with Special Class status, so gets unreduced NHS DB pension of 13k with a TFLS of 39k. 
So she has just broken through the PA and will pay small amount income tax on the NHS pension.

She has been offered part time work somewhere else, still NHS, earning about 15k with a Nest pension.  Abatement rule not activated.

The combined NHS pension and part time salary is more than her 'needed' income amount.
We are wondering what options are available for minimising income tax. I was thinking she could pay extra into the Nest pension and get tax relief there.

But at age 67 she will be getting NHS pension + SP, so will be well over her PA , meaning any income she takes from the Nest will be taxed.

Advice welcome on what is the best approach here.

Silvertabby

Yes, paying more into her NEST pension will reduce her tax liability in her new job, but why do you seem to think that paying tax in retirement is a bad thing?  Personally, I'd rather pay tax and enjoy the 80% I get.

Albermarle

She will get 20% tax relief on contributions and pay 15% tax ( 25% tax free and the rest at 20%) on the way out . A gain of 6.25%.
You would also hope to see some investment growth but that is not guaranteed.

On a wider front, you should not let trying to minimise tax being a main decision driver when looking at family finances . You should be looking to make sure you have sufficient income in retirement, and you have a back up plan in case something untoward/unexpected happens to one or both of you . Then worry about tax after that .

Dazed_and_C0nfused

PJM_62 said:

My wife is soon to retire from her NHS nursing job.  Age 55 with Special Class status, so gets unreduced NHS DB pension of 13k with a TFLS of 39k. 
So she has just broken through the PA and will pay small amount income tax on the NHS pension.

She has been offered part time work somewhere else, still NHS, earning about 15k with a Nest pension.  Abatement rule not activated.

The combined NHS pension and part time salary is more than her 'needed' income amount.
We are wondering what options are available for minimising income tax. I was thinking she could pay extra into the Nest pension and get tax relief there.

But at age 67 she will be getting NHS pension + SP, so will be well over her PA , meaning any income she takes from the Nest will be taxed.

Advice welcome on what is the best approach here.

Just to avoid any confusion as a basic rate taxpayer contributing more to the Nest pension (or personal pensions and SIPP's which operate the relief at source method) won't in any way reduce her income tax liability.

She will have basic rate tax relief added to her contribution but her personal income tax liability will be unchanged as for basic rate payers there is no personal tax saving from contributing to a relief at source pension.

As others have said she will get the 6.25% return from getting tax relief on 100% of qualifying contributions whilst only paying tax on 75% of the fund.  But it's not going to minimise her tax at all.

nigelbb

Are you sure about the NEST pension? If she is employed by the NHS she is entitled to contribute to the NHS pension scheme even if she is already drawing an NHS pension. She would normally have the vastly inferior NEST scheme available only if she already had a full time NHS post. The NHS pension is worth getting on for an extra 40% of salary paid in retirement. https://www.nhsbsa.nhs.uk/who-eligible-be-enrolled-nhs-pension-scheme

PJM_62

nigelbb said:

Are you sure about the NEST pension? If she is employed by the NHS she is entitled to contribute to the NHS pension scheme even if she is already drawing an NHS pension. She would normally have the vastly inferior NEST scheme available only if she already had a full time NHS post. The NHS pension is worth getting on for an extra 40% of salary paid in retirement. https://www.nhsbsa.nhs.uk/who-eligible-be-enrolled-nhs-pension-scheme

She's been paying in to the NHS scheme for 30+ years.
If you 'Retire & Return', to same job, or a different NHS job, you cant continue to pay into the main NHS scheme. Instead its a Nest scheme with employer contributions.

Dazed_and_C0nfused

PJM_62 said:

nigelbb said:

Are you sure about the NEST pension? If she is employed by the NHS she is entitled to contribute to the NHS pension scheme even if she is already drawing an NHS pension. She would normally have the vastly inferior NEST scheme available only if she already had a full time NHS post. The NHS pension is worth getting on for an extra 40% of salary paid in retirement. https://www.nhsbsa.nhs.uk/who-eligible-be-enrolled-nhs-pension-scheme

She's been paying in to the NHS scheme for 30+ years.
If you 'Retire & Return', to same job, or a different NHS job, you cant continue to pay into the main NHS scheme. Instead its a Nest scheme with employer contributions.

Are you sure about that?

She might not be able to join the 1995 scheme but what about the 2015 scheme?

jimi_man

Dazed_and_C0nfused said:

PJM_62 said:

nigelbb said:

Are you sure about the NEST pension? If she is employed by the NHS she is entitled to contribute to the NHS pension scheme even if she is already drawing an NHS pension. She would normally have the vastly inferior NEST scheme available only if she already had a full time NHS post. The NHS pension is worth getting on for an extra 40% of salary paid in retirement. https://www.nhsbsa.nhs.uk/who-eligible-be-enrolled-nhs-pension-scheme

She's been paying in to the NHS scheme for 30+ years.
If you 'Retire & Return', to same job, or a different NHS job, you cant continue to pay into the main NHS scheme. Instead its a Nest scheme with employer contributions.

Are you sure about that?

She might not be able to join the 1995 scheme but what about the 2015 scheme?

No she can't. If she's in receipt of 1995 Pension benefits, then she's barred from rejoining any of the DB schemes (apart from a couple of specialised circumstances related to ill health).