NHS Pension - buying additional pension or AVCs with Prudential or Std Life

Jami74

Zerforax said:

With buying additional pension or AVCs throught the NHS, are they both tied to retirement age (assuming 2015 scheme)?

Trying to work out how to bridge early retirement but I haven't been able to work out if additional pension/AVCs are useful or not for this!

Main option so far seems to be a SIPP?

This was my understanding, and with a retirement age of 67 which may still rise, I opted for a SIPP. My job is hard work and high stress, I cannot imagine how I'll carry on for another 20 years. My SIPP contributions aren't huge but will hopefully buy me the option to retire a year or two earlier.

Zerforax

Jami74 said:

Zerforax said:

With buying additional pension or AVCs throught the NHS, are they both tied to retirement age (assuming 2015 scheme)?

Trying to work out how to bridge early retirement but I haven't been able to work out if additional pension/AVCs are useful or not for this!

Main option so far seems to be a SIPP?

This was my understanding, and with a retirement age of 67 which may still rise, I opted for a SIPP. My job is hard work and high stress, I cannot imagine how I'll carry on for another 20 years. My SIPP contributions aren't huge but will hopefully buy me the option to retire a year or two earlier.

Really appreciate it!

andy230uk

I'm reading this with interest and exploring my options here too.

I was a bit worried about the following sentence in Prudential's Key Features Doc on NHS MPAVC: 'You’re unable to take your AVC benefits before your main NHS Pension Scheme benefits' but have called Prudential who confirmed that only applies if buying an annuity. Standard Life confirmed that their AVC is accessible from 55 (soon to rise to 57) .

I'm more concerned with 'bridging the gap' between when I want to retire and my state pension age (68+), so the annuity issue above doesn't concern me.

I'm leaning toward setting up an AVC for the following reasons:
 - Flexibility in when you can take it. I can re-assess closer to the time and go early if investments have performed better than expected, or do a couple of extra working years if needed.
- I'm 36 so can be a bit more adventurous in fund selection.
- Good discount on management charges compared to other options.
- Pot payable to dependents in the event of my death.

I'm an 8b so doing whatever I can to stay away from the 40% tax rate. Does anyone know if MPAVCs are done as salary sacrifice? I can't work it out or get through on the phone lines.

Dazed_and_C0nfused

andy230uk said:

I'm reading this with interest and exploring my options here too.

I was a bit worried about the following sentence in Prudential's Key Features Doc on NHS MPAVC: 'You’re unable to take your AVC benefits before your main NHS Pension Scheme benefits' but have called Prudential who confirmed that only applies if buying an annuity. Standard Life confirmed that their AVC is accessible from 55 (soon to rise to 57) .

I'm more concerned with 'bridging the gap' between when I want to retire and my state pension age (68+), so the annuity issue above doesn't concern me.

I'm leaning toward setting up an AVC for the following reasons:
 - Flexibility in when you can take it. I can re-assess closer to the time and go early if investments have performed better than expected, or do a couple of extra working years if needed.
- I'm 36 so can be a bit more adventurous in fund selection.
- Good discount on management charges compared to other options.
- Pot payable to dependents in the event of my death.

I'm an 8b so doing whatever I can to stay away from the 40% tax rate. Does anyone know if MPAVCs are done as salary sacrifice? I can't work it out or get through on the phone lines.

I would be surprised if the NHS allows salary sacrifice for pension contributions but it's not impossible.

However this refers to "your" contribution with no mention of salary sacrifice so it looks more likely to be net pay.

https://www.mandg.com/pru/workplace-pensions/employees/public-sector-avc-schemes/nhs-avc-scheme/tax-savings

The_Lantana

andy230uk said:

I'm an 8b so doing whatever I can to stay away from the 40% tax rate. Does anyone know if MPAVCs are done as salary sacrifice? I can't work it out or get through on the phone lines.

Fellow 8b here and looking to do this in the new FY now that LTA limits are abolished (for now).  My understanding - and I could be wrong - is they are done as salary sacrifice.

The_Lantana

Just had a look at the Standard Life website.  I can't post the actual link because I'm not a regular poster, but here's most of it: standardlifepensions.com/nhs/payment-options/how-payments-are-made

It says:

GAVC Plan - Paying from your pre-tax salary

Your payments will be deducted from your salary before you're taxed, which means you’ll pay Income Tax on a lower amount. It also means that your personal tax rate position is taken into account immediately.

For example, if you’re a basic rate taxpayer and you want to make payments of £100 a month, £100 is taken from your salary before your tax liability is calculated. You can normally expect to pay £20 less in tax as a result, although the tax benefit could vary depending on your personal circumstances.

Note – if your earnings are below the personal allowance for income tax you won’t benefit from tax relief on your personal contributions as you don’t pay income tax. However, this doesn’t affect the amount that is paid into your pension and you’ll continue to benefit from the money that your employer pays in.

Beware, the 'Stakeholder' plan is different and deductions are mad from you net salary

Dazed_and_C0nfused

The_Lantana said:

Just had a look at the Standard Life website.  I can't post the actual link because I'm not a regular poster, but here's most of it: standardlifepensions.com/nhs/payment-options/how-payments-are-made

It says:

GAVC Plan - Paying from your pre-tax salary

Your payments will be deducted from your salary before you're taxed, which means you’ll pay Income Tax on a lower amount. It also means that your personal tax rate position is taken into account immediately.

For example, if you’re a basic rate taxpayer and you want to make payments of £100 a month, £100 is taken from your salary before your tax liability is calculated. You can normally expect to pay £20 less in tax as a result, although the tax benefit could vary depending on your personal circumstances.

Note – if your earnings are below the personal allowance for income tax you won’t benefit from tax relief on your personal contributions as you don’t pay income tax. However, this doesn’t affect the amount that is paid into your pension and you’ll continue to benefit from the money that your employer pays in.

Beware, the 'Stakeholder' plan is different and deductions are mad from you net salary

That's definitely not salary sacrifice, it's net pay.

hugheskevi

andy230uk said:

I'm leaning toward setting up an AVC for the following reasons:
 - Flexibility in when you can take it. I can re-assess closer to the time and go early if investments have performed better than expected, or do a couple of extra working years if needed.
- I'm 36 so can be a bit more adventurous in fund selection.
- Good discount on management charges compared to other options.
- Pot payable to dependents in the event of my death.

Fund charges of around 0.76% for a very limited selection of funds doesn't look very appealing in the context of today's DC retail market - I don't think it would be difficult to find a better offering unless you are completely against managing your pension yourself.

You might want to compare and contrast charges and investment options with the more recently changed Civil Service AVC provided by Legal and General - there is quite a difference in the range of funds offered and the pricing.