NHS pension

monaymadlol

Hi I can't find a strong answer for this. But what are the employees to contribute to the NHS pension if they're band 6 or 7 (min and max allowable contribution) and what does the NHS contribute? Is NHS to tax earnings after the pension is deducted?

Thanks

JoeCrystal

Doesn't matter what NHS contribute as it is DB pension scheme. Pretty easy to find the rates. Here

https://www.nhsbsa.nhs.uk/member-hub/cost-being-scheme

monaymadlol

Sorry - I'm confused. I come from having a personal and now sipp pension as a self employed person.

So with a dB pension - how does it work? According to the table I would be contributing around 10% - so the NHS doesn't contribute anything....til retirement?

r6mile

There is no separate "pot" as you might be used to. A defined benefit pension is basically a promise to pay you an (inflation-linked) monthly sum from retirement age until you die - they are very valuable and seldom used outside the public sector.

Your contribution will taken before tax, via the "net pay" method - the MSE calculator will help you work out your take-home pay.

monaymadlol

I just read the employer contribution is just over 20% - 😳

Dazed_and_C0nfused

monaymadlol said:

I just read the employer contribution is just over 20% - 😳

But that doesn't really matter as you don't see that money.

You accrue a pension worth 1/54th (1.85%) of your pensionable earnings.

So if your earn say £50k you would accrue a pension of £925 after one year.

And your pension contributions are deducted before tax so your salary might be £50k but your taxable earnings might only be say £45k.

la531983

There was someone on here a week or so ago who was wanting a refund on their one years worth of local government pension contributions, which work along similar lines. 

Think someone said that they would have to pay 9 times as much in to get a normal pension so by asking for a refund they were doing themselves out of thousands. As you have seen it's very generous. 

QrizB

la531983 said:

Think someone said that they would have to pay 9 times as much in to get a normal pension so by asking for a refund they were doing themselves out of thousands. As you have seen it's very generous. 

You might be thinking of me, in this thread:
https://forums.moneysavingexpert.com/discussion/comment/80241654/#Comment_80241654

la531983

That's the one. 

OP, you will get an annual statement telling you how much you will get if you remain in the scheme until retirement age, along with a how much you are up to so far.

There is also the lump sum option (at age 55 currently, think that may be changing soon to 57?) and this is broken down for you also. 

MX5huggy

Dazed_and_C0nfused said:

monaymadlol said:

I just read the employer contribution is just over 20% - 😳

But that doesn't really matter as you don't see that money.

You accrue a pension worth 1/54th (1.85%) of your pensionable earnings.

So if your earn say £50k you would accrue a pension of £925 after one year.

And your pension contributions are deducted before tax so your salary might be £50k but your taxable earnings might only be say £45k.

And what everyone including the schemes fails to explain is that a pension of £925 is an annual pension of £925 for every year of retirement so live for 20 years you will receive 20 x £925. Work for 20 years getting £925 for each year total pension = £18500 per year. 

But it gets better because the £925 is readjusted for inflation (CPI) plus 1.5% for every year you are an active member (ie working in the NHS) if you leave and in retirement it’s increased by just CPI. So you £925 will have the same or better buying power as it does today. 

Nurse2047

If you look on your total reward statement it will tell you your total, I earn about £700 a year into my pension amount, the employer contributions etc don’t mean a lot. Just divide your pensionable pay by 54 and this is what you accrue annually.