Working after taking NHS pension

Mr_Why

I am considering taking my NHS pension a year early (1995 scheme). I will need to continue to work but not necessarily in the NHS. Are there any restrictions on what I can earn?

Pat38493

There are no restrictions, but your NHS pension will count as taxable income for income tax purposes, so you will be taxed on the total of your NHS pension and your employment income.

I believe there are some minor restrictions if you wanted to take the pension and then go back into the NHS but that doesn’t apply based on your post.

GrubbyGirl_2

Mr_Why said:

I am considering taking my NHS pension a year early (1995 scheme). I will need to continue to work but not necessarily in the NHS. Are there any restrictions on what I can earn?

I presume you realise that you will lose 5% or your pension and 3% of your lump sum for going 1 year early?  Are you sure it's worth it?  Why not go part time and get another part time job?  the 1995 scheme is based on full time salary so going part time - even 1 day a week - won't impact your pension.  You could even go for a lower paid job as it's based on your best of last 3 years salary

Marcon

GrubbyGirl_2 said:

Mr_Why said:

I am considering taking my NHS pension a year early (1995 scheme). I will need to continue to work but not necessarily in the NHS. Are there any restrictions on what I can earn?

I presume you realise that you will lose 5% or your pension and 3% of your lump sum for going 1 year early?  Are you sure it's worth it?  Why not go part time and get another part time job?  the 1995 scheme is based on full time salary so going part time - even 1 day a week - won't impact your pension.  You could even go for a lower paid job as it's based on your best of last 3 years salary

You don't 'lose' it - the starting level of your pension/the amount of any lump sum is reduced to reflect the fact it is being paid sooner than expected and for longer than if someone retires at their scheme's normal retirement age (NRA). The reductions are intended to ensure that by the time someone dies, they will have received the same benefits overall as if they'd retired at NRA.

Bobinyorkshire

It might also be a consideration that taking it early would reduce the amount a dependent would receive after you die. I think for the NHS this is 50%. I’m trying to leave mine until closer to 60 primarily for this safeguard

GrubbyGirl_2

Marcon said:

GrubbyGirl_2 said:

Mr_Why said:

I am considering taking my NHS pension a year early (1995 scheme). I will need to continue to work but not necessarily in the NHS. Are there any restrictions on what I can earn?

I presume you realise that you will lose 5% or your pension and 3% of your lump sum for going 1 year early?  Are you sure it's worth it?  Why not go part time and get another part time job?  the 1995 scheme is based on full time salary so going part time - even 1 day a week - won't impact your pension.  You could even go for a lower paid job as it's based on your best of last 3 years salary

You don't 'lose' it - the starting level of your pension/the amount of any lump sum is reduced to reflect the fact it is being paid sooner than expected and for longer than if someone retires at their scheme's normal retirement age (NRA). The reductions are intended to ensure that by the time someone dies, they will have received the same benefits overall as if they'd retired at NRA.

OK I accept that, but the reality is if you're retiring on a £20,000 pa pension you're only going to get £19,000 and £58,200 instead of £60k

jeelz

Also worth noting that if you do stay on in the NHS, by taking the 95 scheme pension, as things stand, you will no longer be able to contribute to your 2015 pension (they are currently looking to try to change this rule).
Also by not taking your pension till after the beginning of April your lump sum will benefit from the 10.2% increase. 

Flugelhorn

some NHS pensions are subject to abatement where the pension + earning mustn't exceed previous earnings - also you cando more than 16 hours a week in the first month. I think abatement is if you are under normal pension age.

Pat38493

Bobinyorkshire said:

It might also be a consideration that taking it early would reduce the amount a dependent would receive after you die. I think for the NHS this is 50%. I’m trying to leave mine until closer to 60 primarily for this safeguard

I don't think this is true in all cases - for example with my deferred DB pension it says that the spouse pension is 50% but it's somehow based on the non commuted benefits - the wording seems to imply that the spouse would get the 50% of the "full" pension at NRA regardless when it was actually put in payment - this is probably depending on the detailed rules of each scheme.

Albermarle

Pat38493 said:

Bobinyorkshire said:

It might also be a consideration that taking it early would reduce the amount a dependent would receive after you die. I think for the NHS this is 50%. I’m trying to leave mine until closer to 60 primarily for this safeguard

I don't think this is true in all cases - for example with my deferred DB pension it says that the spouse pension is 50% but it's somehow based on the non commuted benefits - the wording seems to imply that the spouse would get the 50% of the "full" pension at NRA regardless when it was actually put in payment - this is probably depending on the detailed rules of each scheme.

That seems to be the case for most (all?) private DB schemes, but no idea about specific rules for public sector DB schemes.

Mr_Why

Thanks all, it is more for my health really, I live alone and work remotely, the isolation is becoming very difficult to deal with. So I thought early pension and get a job where I see people for a change.