Any thoughts on boosting an NHS Pension

Kay55_2

Hi, I am a long time reader of this forum and it has inspired me hugely to keep plugging away at the pension over the years.  I know that its helpful for you to see the stats so they are: My DC Pension £626k, husband DC pension £433k, ISAs combined 220K.  We are both age 49 and my earnings which have increased very significantly in the last 2-3 years allow me to fund a 60K pension contribution for my husband/£10k for me and fill our adult ISAs and ISAs for our 2 sons (there is nothing left after that!).  I have also been paying £2880 into Junior SIPPs for the last 3 years (on the basis that I wish someone had done it for me/I hope seeing the number grow will help to inspire them!).  I would hope to continue contributions at the same level for the next 5 years.  We would both like feel to be able to retire at 55.  House has about 100k mortgage left and value circa £1m.  Husbands business if/when sold may add another £400k to the pot.

So background is that we feel reasonably secure at this point and are focussed on boosting our pension pots and savings as much as we can over the next few years.  We are not  sophisticated at investing but I select after a bit of research and pay into the ISAs myself and our pensions are managed by an IFA.  As I approach 50 I am thinking more and more about pensions and one point that has always been in the back of my mind is my husbands small NHS pension which he is still contributing to.  A few years ago (after we asked our IFA to explore it) I recall that our IFA said this was worth circa £8k per annum (I know its made up of the different dated NHS pension schemes as he's been in it for many years so some paid at 60/65 etc).  After a bit of googling I understand that we can boost an NHS pension by paying a lump sum and it seems that this may be a bit of a financial no-brainer.  I am a worrier so a reasonable amount of DB pension would be lovely to have.  So my questions are:

-  generally speaking is it worth paying extra into the NHS pension/should we wait until we are older or better to do it now which would mean diverting the husbands DC pension contributions?
- is this something our IFA would advise on?  Is it more a specialist thing?  This DB pension is essentially never referred to in our annual reviews.  If it is a no-brainer I would prefer not to have to pay a fee on the contribution.  

Many thanks for any thoughts in advance!

xylophone

https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension/additional-pension

And see

https://forums.moneysavingexpert.com/discussion/comment/78750533/#Comment_78750533

if he goes for the lump sum option rather than regular monthly payments.

Marcon

Kay55_2 said:

Hi, I am a long time reader of this forum and it has inspired me hugely to keep plugging away at the pension over the years.  I know that its helpful for you to see the stats so they are: My DC Pension £626k, husband DC pension £433k, ISAs combined 220K.  We are both age 49 and my earnings which have increased very significantly in the last 2-3 years allow me to fund a 60K pension contribution for my husband/£10k for me and fill our adult ISAs and ISAs for our 2 sons (there is nothing left after that!).  

If your husband is still contributing to his NHS pension, then he will be getting the benefit of employer contributions, too. Did you factor these in when making the £60K contribution on his behalf to stay within his Annual Allowance - not clear from your post that he'd have scope for carry forward? You presumably paid in the net amount which the provider then 'topped up' to £60K by claiming tax relief and adding it to his DC pot? 

I'm sure you've taken it into account, but just in case not....it sounds as if your husband isn't in a higher rate tax bracket whereas you are, so you might be better to pay more to your scheme and get higher rate relief.

Moonwolf

I looked into increasing my NHS pension and these are my my thoughts, not everyone agrees with my conclusions and it is worth reading them as well.

https://forums.moneysavingexpert.com/discussion/comment/78669411#Comment_78669411

NoMore

Marcon said:

Kay55_2 said:

Hi, I am a long time reader of this forum and it has inspired me hugely to keep plugging away at the pension over the years.  I know that its helpful for you to see the stats so they are: My DC Pension £626k, husband DC pension £433k, ISAs combined 220K.  We are both age 49 and my earnings which have increased very significantly in the last 2-3 years allow me to fund a 60K pension contribution for my husband/£10k for me and fill our adult ISAs and ISAs for our 2 sons (there is nothing left after that!).  

If your husband is still contributing to his NHS pension, then he will be getting the benefit of employer contributions, too. Did you factor these in when making the £60K contribution on his behalf to stay within his Annual Allowance - not clear from your post that he'd have scope for carry forward? You presumably paid in the net amount which the provider then 'topped up' to £60K by claiming tax relief and adding it to his DC pot? 

I'm sure you've taken it into account, but just in case not....it sounds as if your husband isn't in a higher rate tax bracket whereas you are, so you might be better to pay more to your scheme and get higher rate relief.

Would be the PIA for NHS pension not employer contributions to check against the AA, as its a DB pension. Either way good to point out that the NHS pension has to be accounted for if still contributing..

Marcon

Kay55_2 said:

We are both age 49 and my earnings which have increased very significantly in the last 2-3 years allow me to fund a 60K pension contribution for my husband/£10k for me and fill our adult ISAs and ISAs for our 2 sons (there is nothing left after that!).  

Did your husband have sufficient earned income to cover this sort of contribution if you made it as a one-off lump sum on his behalf (or contributed the whole amount in one tax year)? Are you sure he didn't exceed the annual allowance (my post and NoMore's post above relate)?

You won't get any tax relief in relation to a contribution from you to your husband's pension, so these are important questions because they dictate how much (if indeed any) of the £60K contribution is tax relievable for your husband.