Nhs pension-opt out?

SVaz

I can understand the urge to save that kind of money when living costs are so high but you won’t actually gain the 10% as it will be taxed, some of it potentially at 40%.  You will be lucky to end up £150 a month better off,  will you lose Child benefit? 
If you are adamant that you need to do this,  do it for only a year or two and get yourself some decent life insurance.    £20 a month should give you a decent amount of cover. 

QrizB

I think we've probably made our point now   and the OP doesn't need any further critiques of her proposal!

I'd second the suggestion that she heads over to the DFW board for help with budgeting and clearing her debts.

DietIrnBru

The NHS pensions providers in both Scotland the rest of the UK need to address the lack of education in the workforce about the pension - not wait until near retirement and waiting for the !!!!!! moment. 

Why this post question keeps coming up amazes me. Heard a few colleagues  saying they would drop out “a while” to pay for weddings?!?! Trashing years of savings for the sake of a 4-5 figure cost of a wedding day. And the lack of financial literacy that they think they will get the “contribution” shown on the payslip, rather than it going to the pension - completely missing the point of tax relief and gross pay contribution. Not to mention the loss of the employer contribution. 

Amazed. And a Band 7 too. 

Dazed_and_C0nfused

I know relatively speaking the number of posts on here are a tiny sample of the scheme members but NHS staff and teachers being amongst the most common to start threads like this makes you wonder what other poor financial choices they make.

kezzygirl

dunstonh said:

 I am also conscious that many people don't meet the pension age, so would rather use the money for now. 

I would hope that someone working for the NHS would have more knowledge on life expectancy than that.  However, perhaps you are not part of the medical side of the NHS.

but I'm just considering my options

It would be possibly the worst financial decision of your life and could cost you tens or even hundreds of thousands of pounds.

 I am now a band 7 which means 10% of my wage is being taken every month for pension.

The NHS pension is worth around 30% of your salary.    You are paying 10% of that and get tax relief and a reduction in NI.  So, its not really costing you 10% net.

It just killed me seeing £450 paid to my pension this month from my wage.

£450 before tax and NI.  So, you wouldn't get £450 if you opted out as you would need to pay tax and NI on that.  You could find yourself reducing your or even losing child benefit as well.

If you do decide to opt out, I thank you on behalf of all taxpayers for your generosity to the Treasury.

I work in mental health crisis. I see all sorts of death, trauma, loss, life experiences so its only natural, and realistic, to think that yes, there may be a chance I don't reach retirement. In fact, 2 of my colleagues retired for 24hrs and returned and within a few weeks one was diagnosed with pancreatic cancer (now deceased) and the other has breast cancer. Another colleague is near retirement and has heart issues and is likely going to be medically retired. Life expectancy is just a number, based on variables. I see enough twists and turns and misfortunes to know and not take for granted that I would be very lucky to die at a grand age.

DoublePolaroid

DietIrnBru said:

The NHS pensions providers in both Scotland the rest of the UK need to address the lack of education in the workforce about the pension - not wait until near retirement and waiting for the !!!!!! moment. 

Why this post question keeps coming up amazes me. Heard a few colleagues  saying they would drop out “a while” to pay for weddings?!?! Trashing years of savings for the sake of a 4-5 figure cost of a wedding day. And the lack of financial literacy that they think they will get the “contribution” shown on the payslip, rather than it going to the pension - completely missing the point of tax relief and gross pay contribution. Not to mention the loss of the employer contribution. 

Amazed. And a Band 7 too. 

I agree but this also makes me hypocritical as I was in the same boat, sailing the seas of NHS pension scheme ignorance, until a few years ago. 

I think a large part of it is simply disinterest in pensions amongst the general population rather than a scheme specific thing so you could argue that everyone could do with that education rather than just folk who work for the NHS. Related to this is the understandable (to a degree) phenomenon that younger people (the sorts who might need to pay for weddings, for example) feel so far removed temporally from retirement that they simply don’t consider pensions a priority and feel that they can park the issue as one to think about later in life. 

Another issue that most definitely afflicts doctors, particularly younger ones who have become more and more disillusioned with “the system” is that their cynicism extends to assuming the pension must be crap whilst also assuming they got screwed over by 2015 and it must be substantially worse than the 1995 scheme. That this may translate into a complete lack of curiosity about the benefits they are getting clearly wanders into spitefully excising their own nose territory. 

I will add that the information the NHS does provide doesn’t make it easy even for those who do want to educate themselves. For example the scheme booklets they publish online fail to include a decent chunk of rather important information. 

At any rate my reaction has been to make it my mission to extol the virtues of the scheme to all my mates and colleagues. I think it might have irritated some of them, but a few others might thank me later.

kezzygirl

DietIrnBru said:

The NHS pensions providers in both Scotland the rest of the UK need to address the lack of education in the workforce about the pension - not wait until near retirement and waiting for the !!!!!! moment. 

Why this post question keeps coming up amazes me. Heard a few colleagues  saying they would drop out “a while” to pay for weddings?!?! Trashing years of savings for the sake of a 4-5 figure cost of a wedding day. And the lack of financial literacy that they think they will get the “contribution” shown on the payslip, rather than it going to the pension - completely missing the point of tax relief and gross pay contribution. Not to mention the loss of the employer contribution. 

Amazed. And a Band 7 too. 

What does my pay band and knowledge of my job have to do with whether I should dip out of the pension? Yes, I'm aware it's taken before tax, yes, I'm aware my employer pays a percentage too. I'm not thick.

kezzygirl

Dazed_and_C0nfused said:

I know relatively speaking the number of posts on here are a tiny sample of the scheme members but NHS staff and teachers being amongst the most common to start threads like this makes you wonder what other poor financial choices they make.

I haven't made poor financial choices. I got us out of debt and worked hard to develop my career, graduating top out of the whole of the nursing school with my grades. I'm and independent and supplementary non medical prescriber and am part way through a masters. We purchased our first house in 2018, having been in social housing for 12 years, and moved last year to a new house and used a good chunk of equity from our first house to put towards this one. We've done lots of home improvements to this house and have unfortunately spent the 22k left from the house sale. Throw in a new kitchen, windows, and a couple of holidays and we have built up about 16k of debt on credit cards. No biggy. I'm fortunate enough that overtime is bountiful as we are on our knees with lack of staff. It's just a case of feeling physically and enthusiastically able to do the shifts. I can budget, its just a case that we need to tighten our belts again and get these debts paid off.

DoublePolaroid

kezzygirl said:

dunstonh said:

 I am also conscious that many people don't meet the pension age, so would rather use the money for now. 

I would hope that someone working for the NHS would have more knowledge on life expectancy than that.  However, perhaps you are not part of the medical side of the NHS.

but I'm just considering my options

It would be possibly the worst financial decision of your life and could cost you tens or even hundreds of thousands of pounds.

 I am now a band 7 which means 10% of my wage is being taken every month for pension.

The NHS pension is worth around 30% of your salary.    You are paying 10% of that and get tax relief and a reduction in NI.  So, its not really costing you 10% net.

It just killed me seeing £450 paid to my pension this month from my wage.

£450 before tax and NI.  So, you wouldn't get £450 if you opted out as you would need to pay tax and NI on that.  You could find yourself reducing your or even losing child benefit as well.

If you do decide to opt out, I thank you on behalf of all taxpayers for your generosity to the Treasury.

I work in mental health crisis. I see all sorts of death, trauma, loss, life experiences so it’s only natural, and realistic, to think that yes, there may be a chance I don't reach retirement. In fact, 2 of my colleagues retired for 24hrs and returned and within a few weeks one was diagnosed with pancreatic cancer (now deceased) and the other has breast cancer. Another colleague is near retirement and has heart issues and is likely going to be medically retired. Life expectancy is just a number, based on variables. I see enough twists and turns and misfortunes to know and not take for granted that I would be very lucky to die at a grand age.

Yes it’s natural. 

I would say though - and this is a general point rather than specific to you - that if you ensure you’ve planned to have adequate income to fund a long retirement but die young, yes you’ll have “wasted” unspent capital but you won’t care because you’ll be dead. 

Whereas if the opposite happens you could be miserable for 30 years. 

So objectively it makes sense to make plans assuming you won’t die young. 

kezzygirl

Thanks for all of your comments, some lovely and taken in the nature they were intended and others rather rude and insulting. But I guess that's the Internet for you! FYI I'm 38 and my husband is 50. I know I'm 'lucky' to have an nhs pension, and a secure job that is better paying than most. But I've worked hard to get here and I'm highly skilled for what I'm paid and believe me, i and every other colleague in my team work hard for our money. I'm midpoint band 7 so about to hit the top point next year I believe. I will stay in the pension and tighten the belt in other ways. Thanks again, didn't expect so many responses!