2015 Pension Scheme

Nurse2047

You may find some of this guys videos helpful on explaining NHS pension 

https://youtu.be/6G0zjF3V83M

Workerdrone

This is a very interesting thread. I find it difficult to work out what my wife’s pension might be but am hoping someone can have a stab. She is 48. Has worked in the nhs since she was 19 so has 16 years in the 1995 section, and nearly 8 in the 2015 section. She plans to draw from her 1995 section and go at 60. We put money into a sipp and hope to have around 50k in there which we will use as top up until her 2015 section kicks in at 67/68.

she is presently near top of band 7.

putting mccloud aside for a moment, would anyone be able to give me an idea of what she might get at 60 just from the 95 section

much appreciated 

1995 section

Pay	£48,765.40
Updated To	31/03/2015

Standard Benefits 

	Current value of Benefits
Pension	£9,714.67
Lump Sum	£29,144.01
Adult Dependant Pension	£4,857.33
Reckonable Membership	15 years, 342 days
Hypothetical Annuity Cost	£485,733.50

2015 section

Year End	Pensionable Earnings	Pension Earned	Revaluation
2016	£25,663.70	£475.25	1.4
2017	£30,047.86	£556.44	2.5
2018	£30,469.37	£564.25	4.5
2019	£30,834.31	£571.01	3.9
2020	£33,441.19	£619.28	3.2
2021	£41,476.48	£768.08	2
2022	£45,664.01	£845.63	4.6

Dazed_and_C0nfused

At face value it looks like it's going to be 19.92% of whatever her "final salary" is under the 1995 scheme rules.

There is some info about this here,

https://www.nhsemployers.org/articles/comparing-different-sections-nhs-pension-scheme

But with 12 years to go it's difficult for her to know what her pay could look like that far into the future.

Moonwolf

Just to press the point home further about costs and benefits.

If someone had started at the bottom of Band 7 on 1st April 2015 and progressed up the pay points then retired at age 67 on the 31st March 2024 with effectively 9 years service.

I think with revaluations they would have built up a total pension of £8,014 a year.  This is index linked and will grow by CPI each year.  Even with no other pension provision but a full state pension this would be £18,614 a year to live on.

This would have cost roughly* £35,000 before tax over the same period. If you had put that amount in a private pension and been lucky enough to get a growth of 2.5% over inflation you might have around £64,000 in your pot (I've made some generous assumptions there about when the growth happens), this would give you about £2250 a year if you don't want to run out of money, perhaps £3,000 a year if you buy an annuity and at best it will be CPI capped at 5%.

Those figures are 20% less if you want to save outside the tax wrapper.

If you decided you didn't care about running of money out you might get 8-9 years at £8,000 a year.  Most people over 50  have an 80% plus chance of living to 76 or more - https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

In addition there are dependant pensions for children while they are children, your spouse gets 1/3 of the £8,014 as a pension if you die first.  You get 2x salary life insurance while you are in the scheme and your salary is paid for 6 months if you die in service.

*roughly as recent contribution rate changes confuse things

MEM62

ClaNix said:

I am not planning to work until i am 68 and was hoping to retire early. 4.5 per cent is a lot. I wonder if it is still worth sticking with the scheme and still getting more than trying to save the 9.8 per cent myself.

The short answer is yes - stick with the scheme. Whatever you think your understanding is, you will not get a better return on your money than by staying in the scheme.  

GrubbyGirl_2

If you leave the NHS pension scheme it will be the worst mistake of your life.  You cannot get better than the NHS pension scheme.  You might be a band 7 now but that may change.  I was a band 7 12 years before I retired but by the time I retired I was top of band 9, which in todays money is £65k more than top of band 7, so 1/54th is £2,129.  And don't forget you'll pay more tax and you won't have ill health retirement, death i service or a survivor pension.  You're gambling on staying fit and well until you retire and only living 20 years (though you should calculate less because after 20 years the pound will likely be worth half of what it does today).  Don't believe us get independent advice