NHS pension transfer or withdraw cash

brucieboy

My wife is in the NHS (2 years so far)paying 6%So getting about 21% a month going in

Between us,added together,we both have good SIPPs as well..so NHS is basically a top up

We cant get a straight answer from anyone !!

In 11 years time,when we are 67 and looking to retire,we are possibly looking to either:

Transfer this to her SIPP,at that time or...

Withdraw the whole lot and put into THE SIPP,so more flexible

I understand she can draw out  25% tax free,BUT can she withdraw the rest but pay tax on it ?

This isnt our definite plan but need to know so we can plan things now

Even the NHS pension dept can't or won't give her an answer

Mr.Generous

If you can transfer it out you can take the lot and pay the tax, some govt schemes don't allow you to transfer it to another provider. 67 is late though, go early and enjoy the cash.

Dazed_and_C0nfused

Is she not in the 2015 NHS scheme?

Which has no "pot".

TARDIS

Non of the NHS pension schemes have pots. She cannot transfer it to a SIPP. She cannot withdraw it all as there is no defined amount to withdraw.

They are all defined benefit schemes meaning what you pay in is not directly related to the benefits you get. She will get a monthly payment for life. Taking maximum lump sum is not usually beneficial unless she has a life limiting condition or you really need the money up front.

The NHS pension scheme has some good videos to explain how it works.

hyubh

brucieboy said:

My wife is in the NHS (2 years so far)paying 6%So getting about 21% a month going in

Between us,added together,we both have good SIPPs as well..so NHS is basically a top up

We cant get a straight answer from anyone !!

In 11 years time,when we are 67 and looking to retire,we are possibly looking to either:

Transfer this to her SIPP,at that time or...

Withdraw the whole lot and put into THE SIPP,so more flexible

Once she passes two years membership she will pass the scheme 'vesting period' and so have a pension in the scheme. Under current legislation regarding 'unfunded' public sector pension schemes like the NHS one, this will also mean she can no longer transfer out to a money purchase arrangement, so transferring out to a SIPP will be out.

xylophone

My wife is in the NHS (2 years so far)paying 6%So getting about 21% a month going in

The NHS Pension Scheme is an unfunded Public Service Pension Scheme.

Transfers out to a scheme providing flexible benefits (like a SIPP) are not permitted.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/transferring-your-defined-benefit-pension

If you’re in what’s called an ‘unfunded’ public sector pension scheme, you will only be able to transfer your pension to another defined benefit scheme (and nowhere else).

Examples of an unfunded public sector pension scheme are the Teachers’ Pension Scheme and the NHS Pension Scheme.

brucieboy

OK thanks for that ....so we anticiapate that the value at around age 67 ,it will be about £50k,which won't give a lot a month.....we have setup the SIPPS as flexible drawdown (25% out already on both,as we suffer  a bit from long term  ailments)...so we are setup for the future but enjoying things now 

The flexible drawdown will be great as we can draw  a bit more if we have  good month,but not ,if we don't and let it build up,so we always have a certain fund value at all times

So is it really worth paying into the NHS,if the monthly amount is small ? Should she pay  into her SIPP instead where you get total flexibility when you retire (but not getting the 14% added of course)

I know the NHS double it,but it's not flexible 

I also pay 6% into my company pension,they add 11%,so by age 65 will be about £60k,I am able to transfer this to my SIPP when I leave at retirement

Our sipps have made 130% in 9 years (they are managed daily),so done pretty well on them

So basically ,we don't know whether to pay NHS pension ( small monthly amount at retirement,) or top up the SIPP(total flexibility at retirement and whole fund passed into family when we have passed away)

QrizB

brucieboy said:

OK thanks for that ....so we anticiapate that the value at around age 67 ,it will be about £50k,which won't give a lot a month.

In 11 years time (with 13 years service) you're thinking her "pot" will be worth £50k, so I guess her current 27% "contributions" are about £4k pa which means her current salary must be around £15k pa?

Her NHS pension will be 13/54ths of her salary, so around £3600 pa, £300/month.

(I've made a lot of undocumented assumptions here and I could be way off.)

Silvertabby

Where has that £50K come from? If that's your estimate of employee and employer contributions, then you are WAY off base.

Your wife's pension is a defined benefit (CARE) scheme.  The value of her benefits will be way in excess of her contributions. 

What is her annual salary?

xylophone

You are aware of all the benefits offered by the NHS pension scheme?

Death in service? Widower's pension?

And a DB pension does not have a pot.

It provides a defined benefit based on salary/length of service.

This gives a secure, index linked pension for  life.

Moonwolf

brucieboy said:

 ....so we anticiapate that the value at around age 67 ,it will be about £50k,which won't give a lot a month…

I’ve no idea where you get this £50k figure there is no pot, just a guaranteed monthly pension.

You said earlier your wife was paying 6%, at that contribution rate I assume she is earning between £15k and £21k (contribution rate is 5.6%). At £18k she would be adding £333 a year of pension. This is revalued every year she is working at CPI + 1.5% (CPI if she stops working).  After 13 years (2 worked plus 11 to 67) that would be a monthly pension in today’s money of about £400 a month, guaranteed. You would need a pot well in excess of £100k to match that.

You also get free life insurance and a spouses pension.

In effect the NHS is adding much more than her basic contributions and you wouldn’t get that in a SIPP. It can’t go down, you won’t get that in a SIPP. 

This makes a great core of pension, plus your state pension on which you add the flexibility of the SIPPs you already have.

To stop paying into the NHS pension to pay into a SIPP would be equivalent to taking a pay cut.