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NHS pension

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
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Comments

  • JoeCrystal
    JoeCrystal Posts: 3,250 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    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
  • 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
    r6mile Posts: 258 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    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.
  • I just read the employer contribution is just over 20% - 😳
  • 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
    la531983 Posts: 2,554 Forumite
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    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
    QrizB Posts: 15,262 Forumite
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    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
    N. Hampshire, he/him. Octopus Intelligent Go elec & Tracker gas / Shell (now TT) BB / Lebara mobi. Ripple Kirk Hill member.
    2.72kWp PV facing SSW installed Jan 2012. 11 x 247w panels, 3.6kw inverter. 33MWh generated, long-term average 2.6 Os.
    Not exactly back from my break, but dipping in and out of the forum.
    Ofgem cap table, Ofgem cap explainer. Economy 7 cap explainer. Gas vs E7 vs peak elec heating costs, Best kettle!
  • la531983
    la531983 Posts: 2,554 Forumite
    1,000 Posts First Anniversary Name Dropper
    edited 25 August 2023 pm31 2:41PM
    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
    MX5huggy Posts: 7,077 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    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. 
  • 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. 
    Nurse striving for financial freedom
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