NHS Pension

Newheight13

Hi,

Could anyone tell me what my pension will be when I retire at 65 as I find the calculators so confusing, I just can’t get my ahead around it!

I earn 56k and would have paid this into my pension for 30 years within the NHS. I also paid into the pension when my salary was 30k for the last 4 years.

Thanks 

ggmf

Checked your TRS statement? 

Newheight13

I haven’t, that’s great thank you!

ggmf

You have not said how old you are, or which scheme(s) you are in. I would strongly advise anybody to download and keep their TSR statements. My 2008 scheme is available early in 2023 (I've submitted my AW8P), for the 6th year on the trot my issued statement is incorrect, and I'm waiting receipt of a manual calculation.

Newheight13

Thank you I will check. 2015 scheme and aged 34.

I probably wouldn’t know if it was wrong. Need to invest some time in it as I have no other pension. 

Dazed_and_C0nfused

Newheight13 said:

Thank you I will check. 2015 scheme and aged 34.

I probably wouldn’t know if it was wrong. Need to invest some time in it as I have no other pension. 

Basically each year (year runs to 31 March I think) you accrue 1.85% (1/54th) of your pensionable pay as pension.

So say your pensionable pay was £30,000 then you would pay £2,790* in pension contributions.  Although as these reduce your pay for tax purposes (net pay contribution method) the real cost, assuming you don't have other income that makes you a higher rate payer, is only £2,232**

In return you have accrued a pension of £555.  Which has quite generous inflation proofing whilst you are still contributing to the scheme.

*this may change in the future as NHS contribution rates are under review.

**this will change form April 2023 as the basic rate of tax is reduced to 19%.

Newheight13

Thank you for this. I’m so bad with this I not sure in quite understand.

So is this what I would receive a month if on a 30k salary, paying into the scheme for 30 years? Does this include the NHS contribution too as this doesn’t work out for me? Does it make a difference whether I pay in 20 years or 30 years as it’s based in 3 best months?

Sorry if that makes no sense but that’s how I compute pensions! 

MX5huggy

Your way of computing pensions is missing the target 🎯 by a long way. 

The 2015 NHS pension is Career Average Scheme (CARE). Each year you contribute you earn an amount of annual pension in the example £555 of annual pension to be paid every year (split over 12 months) from your State pension Age, you can take it earlier if you wish with non penalising reductions. So if you worked 20 years earning £30000 each year you would get 20 x £555 = £11100 of annual pension do 30 years and it’s £16650. 

But there’s 2 other things to consider as your salary rises the pension earned each year goes up. So in year 1 £30k =£555 year 2 earn £32k =. £592 etc. 
Secondly previous years accumulated pension is uprated by inflation plus 1.5% (this is a real plus). So if inflation is 5% in year 2 the first £555 (+6.5%) becomes £591.

Newheight13

Thanks you so much this is all helpful.