NHS Pension Contribution or Stealth Tax?

Stubod

..simples..DO NOT OPT OUT OF THE NHS PENSIONS SCHEME.....its an absolute no brainer....

Nurse2047

easy way to get it is to work out 1/54th of your pensionable salary. That is what you accrue each year. Say you earn 20k now that’s £370 a year for life pension when retired. Each year that’s added to dependent on salary- with inflation. It doesn’t sound a lot now but soon adds up. 

Salary 30k= £555 a year pension, if earnt that for 35 years is a pension of £19,444 a year (that’s without inflation added) 

Troxy

MFW2026 said:

easy way to get it is to work out 1/54th of your pensionable salary. That is what you accrue each year. Say you earn 20k now that’s £370 a year for life pension when retired. Each year that’s added to dependent on salary- with inflation. It doesn’t sound a lot now but soon adds up. 

Good analysis - another way to look at this is to compare against annuities.
An inflation linked pension of £370 p.a would cost approx £10k give or take for a cost of just over £1500 before tax. Amazing value.

DoublePolaroid

dunstonh said:

. Put them in contact with an older worker looking forward to retirement, an ex-employee who has retired early through Ill health, or family of a deceased member who has had their mortgage cleared through death in service payment.  We are doing them a disservice to dismiss these decisions.

That may seem like a good idea but a lot of the NHS, is quite militant and some of the union reps slag the NHS pension off. Their agenda is anti-government and they would put their agenda ahead of the worker.    So, get the wrong person explaining it and it could do more damage than good.

I’m not in a Union and I’m not sure I’ve ever spoken to a rep, but suspicion of the government by NHS employees is IMO justified for an endless list of reasons. One consequence of this is that when the 2015 scheme was introduced, everybody assumed it must be an attempt to screw us all over. 

It doesn’t help that, to an average person, the nuts and bolts of the scheme are rather complex and even the official scheme booklet doesn’t actually provide all the information you need to understand everything you need to understand in order to properly plan for retirement. This is compounded by the fact that communicating with the NHS pension people can be an exercise in cranial brick-wall trauma and the information they provide is not infrequently inaccurate. It took me several months reading numerous parts of the NHSBSA website, as well as helpful contributions from folk on here, to get to grips with all of it, though admittedly my circumstances are somewhat atypical. I’m therefore entirely unsurprised many of my colleagues lack the time and/or inclination to do the research.

The scheme is, of course, fantastic and it’s a shame that many of the people who potentially benefit are entirely oblivious.

Flugelhorn

The NHS can be complex, particularly if there is a combination of practitioner and officer pay.

The practitioner element requires endless submissions of bit of paper which make the whole thing take years to catch up with itself.  At one point they introduced this for locums and salaried GPs, only they didn't advertise the fact, several years on  people found that although they had been paying superann, none of it was recorded because they hadn't filled in the crucial bit of  paper.  I began to sound like a stuck record on a forum "get your March payslip, find this figure, put it in this box on this form, add all the numbers together, look up relevant %, work out the superann, take it away from the figure you paid  etc etc " - lots of distressed docs who hadn't realised. Think it is getting easier and they are more pension savvy now.

Agree with @DoublePolaroid when the 2015 came out there was an assumption that it would be worse but actually it looks OK and is probably more flexible in that higher salaries at various stages are recognised and you can keep track of your pension as you go along (which wasn't always possible) 

nigelbb

Dazed_and_C0nfused said:

BPSparks said:

Thanks for all of your replies. Most were informative if some a bit passive aggressive ..lol...chill keyboard warrior. 
What I have learnt is that the scheme is, according to one of the comments,...a defined benefit scheme. I have been used to defined contribution schemes and thought it that. As another comment mentioned... staff are pretty unaware of their pension scheme here, and I haven't been provided with any information although deductions have been taken. I will endeavor to find out more. 
Forward and upward....byeeeee 

A simple example.

Say you earn £30k in pensionable wages.  And contribute 7.7%, a total of £2,310.

But the real cost is only £1,848 because you avoided paying tax on £2,310 of your earnings.

In return you will have accrued a pension of £555.55.  And the NHS 2015 scheme has a generous inflation proofing aspect, CPI + 1.5%.  So if you had earned £555.55 this tax year it would actually be £620 once the inflation uplift was applied.

Life expectancy at retirement is around twenty years so multiply that index linked £555.55 by twenty. Think of it as an extra 30-40% of your salary that is paid in retirement.