NHS Pension

dunstonh

It's also 1/3 which they can't access or have paid to them to help clear their debts faster.

Its not 1/3 though.  The benefit is is that value but the cost is much less.    And by the time tax and NI is paid on the contribution, it may not actually have given that much extra to go towards the debt.

tmoneysauce

Dazed_and_C0nfused said:

tmoneysauce said:

I’ve been working for the NHS for 2 years and 6 months. I opted out of the pension scheme 2 years into it as it was too costly for me. A couple months later I heard that I could be refunded the pensions so I sent off the form only to discover that I was rejected due to working over 2 years for the NHS. I had sent the form 2 years and 3 months into service. Is there any way that I could try to argue against this, or should I just cut my losses?

Trust me you will be more than happy to have that 2+ years worth of pension when you reach retirement age.

A refund of pension contributions (from which non refundable tax would have been deducted reducing what you actually got back) from a public sector pension scheme is virtually always a terrible choice financially.

Hopefully you will soon realise you are essentially taking a huge pay cut by opting out, not to mention the extra tax you will almost certainly now have to pay 😳.

The sooner you opt back in the better.

Thank you. However this is temporary, the pay difference with the extra tax actually has helped me and I also have a private pension that I save money aside for

tmoneysauce

QrizB said:

Per the OP's other thread, they're 26 and four years into an IVA dealing with debts they ran up in their early 20s.

While I agree that opting back into the NHS pension is likely to be in their long-term best interests, I can understand how retirement might seem a long way away and immediate needs appear more important.

Yes this is correct. Opting out of pensions temporarily has helped me now with my finances

Marcon

tmoneysauce said:

Dazed_and_C0nfused said:

tmoneysauce said:

I’ve been working for the NHS for 2 years and 6 months. I opted out of the pension scheme 2 years into it as it was too costly for me. A couple months later I heard that I could be refunded the pensions so I sent off the form only to discover that I was rejected due to working over 2 years for the NHS. I had sent the form 2 years and 3 months into service. Is there any way that I could try to argue against this, or should I just cut my losses?

Trust me you will be more than happy to have that 2+ years worth of pension when you reach retirement age.

A refund of pension contributions (from which non refundable tax would have been deducted reducing what you actually got back) from a public sector pension scheme is virtually always a terrible choice financially.

Hopefully you will soon realise you are essentially taking a huge pay cut by opting out, not to mention the extra tax you will almost certainly now have to pay 😳.

The sooner you opt back in the better.

Thank you. However this is temporary, the pay difference with the extra tax actually has helped me and I also have a private pension that I save money aside for

Do you mean you are currently putting money into a private pension, but have opted out of the NHS scheme? If so, you're missing out on the employer contribution and all the other positives of the NHS DB scheme.

dunstonh

tmoneysauce said:

QrizB said:

Per the OP's other thread, they're 26 and four years into an IVA dealing with debts they ran up in their early 20s.

While I agree that opting back into the NHS pension is likely to be in their long-term best interests, I can understand how retirement might seem a long way away and immediate needs appear more important.

Yes this is correct. Opting out of pensions temporarily has helped me now with my finances

A better way of wording it is that you have robbed your retirement years to pay it.    

Whilst I can fully understand your sentiment behind it, and debt issues can be very hard on people mentally, opting out should be the absolute last resort option as having a small amount available now will be dwarfed by the amount of money lost in later life.     

 I also have a private pension that I save money aside for

That won't come close to the NHS pension.  You would actually be better clearing the debt quicker with that money and re-joining the NHS pension ASAP.

What was your contribution to the NHS pension as it showed on your payslip?
What is your contribution to the personal pension?

Emmia

tmoneysauce said:

Dazed_and_C0nfused said:

tmoneysauce said:

I’ve been working for the NHS for 2 years and 6 months. I opted out of the pension scheme 2 years into it as it was too costly for me. A couple months later I heard that I could be refunded the pensions so I sent off the form only to discover that I was rejected due to working over 2 years for the NHS. I had sent the form 2 years and 3 months into service. Is there any way that I could try to argue against this, or should I just cut my losses?

Trust me you will be more than happy to have that 2+ years worth of pension when you reach retirement age.

A refund of pension contributions (from which non refundable tax would have been deducted reducing what you actually got back) from a public sector pension scheme is virtually always a terrible choice financially.

Hopefully you will soon realise you are essentially taking a huge pay cut by opting out, not to mention the extra tax you will almost certainly now have to pay 😳.

The sooner you opt back in the better.

Thank you. However this is temporary, the pay difference with the extra tax actually has helped me and I also have a private pension that I save money aside for

That is mad if you're forgoing the NHS scheme but still saving privately - you'd be better cutting the private contributions.

Dazed_and_C0nfused

Emmia said:

tmoneysauce said:

Dazed_and_C0nfused said:

tmoneysauce said:

I’ve been working for the NHS for 2 years and 6 months. I opted out of the pension scheme 2 years into it as it was too costly for me. A couple months later I heard that I could be refunded the pensions so I sent off the form only to discover that I was rejected due to working over 2 years for the NHS. I had sent the form 2 years and 3 months into service. Is there any way that I could try to argue against this, or should I just cut my losses?

Trust me you will be more than happy to have that 2+ years worth of pension when you reach retirement age.

A refund of pension contributions (from which non refundable tax would have been deducted reducing what you actually got back) from a public sector pension scheme is virtually always a terrible choice financially.

Hopefully you will soon realise you are essentially taking a huge pay cut by opting out, not to mention the extra tax you will almost certainly now have to pay 😳.

The sooner you opt back in the better.

Thank you. However this is temporary, the pay difference with the extra tax actually has helped me and I also have a private pension that I save money aside for

That is mad if you're forgoing the NHS scheme but still saving privately - you'd be better cutting the private contributions.

+1 for this comment

hugheskevi

tmoneysauce said:

QrizB said:

Per the OP's other thread, they're 26 and four years into an IVA dealing with debts they ran up in their early 20s.

While I agree that opting back into the NHS pension is likely to be in their long-term best interests, I can understand how retirement might seem a long way away and immediate needs appear more important.

Yes this is correct. Opting out of pensions temporarily has helped me now with my finances

It is worth appreciating that opting out of a good pension has very similar characteristics to borrowing money.

If you borrow money, you increase your spending power now at the expense of a lower spending power in the future when you have to repay the money. If the borrowing is at 0% and easily repayable that may not be bad, but if it is at a high rate and difficult to repay that is usually not a good idea.

If you opt out of a high-quality pension, your spending power increases by a small amount, but at the expense of much lower resources in the future, as you lose the value of the large employer contribution.

So you could view opting out of the pension as being akin to taking a high-interest loan which you will repay in retirement. A common saying is that you cannot get out of debt by borrowing more.

GrubbyGirl_2

tmoneysauce said:

Dazed_and_C0nfused said:

tmoneysauce said:

I’ve been working for the NHS for 2 years and 6 months. I opted out of the pension scheme 2 years into it as it was too costly for me. A couple months later I heard that I could be refunded the pensions so I sent off the form only to discover that I was rejected due to working over 2 years for the NHS. I had sent the form 2 years and 3 months into service. Is there any way that I could try to argue against this, or should I just cut my losses?

Trust me you will be more than happy to have that 2+ years worth of pension when you reach retirement age.

A refund of pension contributions (from which non refundable tax would have been deducted reducing what you actually got back) from a public sector pension scheme is virtually always a terrible choice financially.

Hopefully you will soon realise you are essentially taking a huge pay cut by opting out, not to mention the extra tax you will almost certainly now have to pay 😳.

The sooner you opt back in the better.

Thank you. However this is temporary, the pay difference with the extra tax actually has helped me and I also have a private pension that I save money aside for

I can't begin to tell you how troubled I am by that statement.  A private pension will give you a fraction of the benefits of your NHS pension.  I am an NHS pensioner and my benefits are so good I am able to save half of my pension each month and at the moment I don't even get my state pension.  PLEASE, if you have to cut any spending cut the private pension and rejoin the NHS scheme.  You'll be so grateful you did when you're closer to retirement

Silvertabby

GrubbyGirl_2 said:

tmoneysauce said:

Dazed_and_C0nfused said:

tmoneysauce said:

I’ve been working for the NHS for 2 years and 6 months. I opted out of the pension scheme 2 years into it as it was too costly for me. A couple months later I heard that I could be refunded the pensions so I sent off the form only to discover that I was rejected due to working over 2 years for the NHS. I had sent the form 2 years and 3 months into service. Is there any way that I could try to argue against this, or should I just cut my losses?

Trust me you will be more than happy to have that 2+ years worth of pension when you reach retirement age.

A refund of pension contributions (from which non refundable tax would have been deducted reducing what you actually got back) from a public sector pension scheme is virtually always a terrible choice financially.

Hopefully you will soon realise you are essentially taking a huge pay cut by opting out, not to mention the extra tax you will almost certainly now have to pay 😳.

The sooner you opt back in the better.

Thank you. However this is temporary, the pay difference with the extra tax actually has helped me and I also have a private pension that I save money aside for

I can't begin to tell you how troubled I am by that statement.  A private pension will give you a fraction of the benefits of your NHS pension.  I am an NHS pensioner and my benefits are so good I am able to save half of my pension each month and at the moment I don't even get my state pension.  PLEASE, if you have to cut any spending cut the private pension and rejoin the NHS scheme.  You'll be so grateful you did when you're closer to retirement

This reminds me of the reason why a LGPS member opted out.  He reckoned that the LGPS was a rip off because we were charging him over £100 per month (this was some years ago) when a Stakeholder pension only cost £20 per month.