NHS PENSIONS

peter3hg

As a professional working in a non-healthcare specific role in the NHS I have been offered roles in the private sector paying 35-50% more than my NHS salary, often for a role with less responsibility.
Ultimately I've always decided to stay in the NHS for a myriad of reasons, but the pension is the main one. If the pension is ever changed to a DC then I'll be straight out the door, because the other benefits of the public sector don't come near to outweighing the lower headline pay.

If I can eke another 10 years out of the NHS pension scheme then that will cover a reasonable lifestyle from state pension age. Any time after that will just bring my retirement date forward.

Ultimately though a change DC pensions would put a big hole in the Government's current deficit. Currently (excluding LGPS of course) the employee's contributions go to pay current pensioners. That contribution is about £10bn a year. If public sector pensions switched to DC the government would initially still have the same pensions to fund but would not be able to use the £10bn from employees and would probably have to put another £10bn in to those DC pensions. That gives them a £20bn a year problem in borrowing terms.
Obviously as the years go by that gap would close and in maybe 15-20 years the government would start seeing the savings but they would have had years of higher initial borrowing to get there.

Albermarle

peter3hg said:

As a professional working in a non-healthcare specific role in the NHS I have been offered roles in the private sector paying 35-50% more than my NHS salary, often for a role with less responsibility.
Ultimately I've always decided to stay in the NHS for a myriad of reasons, but the pension is the main one. If the pension is ever changed to a DC then I'll be straight out the door, because the other benefits of the public sector don't come near to outweighing the lower headline pay.

If I can eke another 10 years out of the NHS pension scheme then that will cover a reasonable lifestyle from state pension age. Any time after that will just bring my retirement date forward.

Ultimately though a change DC pensions would put a big hole in the Government's current deficit. Currently (excluding LGPS of course) the employee's contributions go to pay current pensioners. That contribution is about £10bn a year. If public sector pensions switched to DC the government would initially still have the same pensions to fund but would not be able to use the £10bn from employees and would probably have to put another £10bn in to those DC pensions. That gives them a £20bn a year problem in borrowing terms.
Obviously as the years go by that gap would close and in maybe 15-20 years the government would start seeing the savings but they would have had years of higher initial borrowing to get there.

It is pretty unlikely that public sector pensions will go to DC. The preferred route is to change the rules of the DB schemes so they are a bit less generous. 

 I have been offered roles in the private sector paying 35-50% more than my NHS salary, often for a role with less responsibility.
Ultimately I've always decided to stay in the NHS for a myriad of reasons, but the pension is the main one.

Although the NHS scheme is very good, I would think a salary increase of this magnitude ( especially 50%) would more than adequately compensate . Even if you bumped on your contributions by 20%+ ( which is probably what would be needed) you would still be better off .

Aretnap

Albermarle said:

peter3hg said:

As a professional working in a non-healthcare specific role in the NHS I have been offered roles in the private sector paying 35-50% more than my NHS salary, often for a role with less responsibility.
Ultimately I've always decided to stay in the NHS for a myriad of reasons, but the pension is the main one. If the pension is ever changed to a DC then I'll be straight out the door, because the other benefits of the public sector don't come near to outweighing the lower headline pay.

If I can eke another 10 years out of the NHS pension scheme then that will cover a reasonable lifestyle from state pension age. Any time after that will just bring my retirement date forward.

Ultimately though a change DC pensions would put a big hole in the Government's current deficit. Currently (excluding LGPS of course) the employee's contributions go to pay current pensioners. That contribution is about £10bn a year. If public sector pensions switched to DC the government would initially still have the same pensions to fund but would not be able to use the £10bn from employees and would probably have to put another £10bn in to those DC pensions. That gives them a £20bn a year problem in borrowing terms.
Obviously as the years go by that gap would close and in maybe 15-20 years the government would start seeing the savings but they would have had years of higher initial borrowing to get there.

 I have been offered roles in the private sector paying 35-50% more than my NHS salary, often for a role with less responsibility.
Ultimately I've always decided to stay in the NHS for a myriad of reasons, but the pension is the main one.

Although the NHS scheme is very good, I would think a salary increase of this magnitude ( especially 50%) would more than adequately compensate . Even if you bumped on your contributions by 20%+ ( which is probably what would be needed) you would still be better off .

Without doing the maths, 20% extra contributions sounds rather low if you factor in 

(1) It sounds like he's fairly late in his career, so DC contributions won't have very long to grow before retirement
(2) Less generous indexing on existing accrued pension once he leaves the NHS
(3) Loss of final salary provision on pre-2005 entitlement - significant if he has been in a long time, especially if he hopes to sneak in one final promotion before retirement. 
(4) Whatever value you put on the guaranteed benefits as opposed to being at the mercy of the stock market for your retirement...

I looked into this a while ago when my wife was contemplating moving out of the NHS. I can't remember the exact numbers but the pay rise she'd have needed to have been better off overall was very high. I can certainly believe that 30%+ would work out marginal at best for someone late-ish career. 50% would probably be worth it though.

nigelbb

For doctors, nurses, radiographers, physiotherapists etc etc the NHS is a near monopoly employer. All have seen a pay cut in real terms of 30% or more since 2010 but at least they still have a decent pension. The private sector has mostly screwed their employees out of decent pensions to ensure more profit for shareholders. They have been able to do this because of the decline in union membership & the fact that most employees don't in general understand or value pensions.

Amateurretiree

dunstonh said:

I have said it before, and I will say it again: The NHS workforce (and pensioners) are some of the most confused people about pensions.    They understate their pension benefits, they think they are hard done by and now they don't appear to realise you pay tax on taxable income.

Not all of us! I retired at 55 on my NHS pension and realise how fortunate I am. It’s not a massive pension, but enough to take me into the taxable bracket.

I get my State pension in 5 years and I know my tax taken off my NHS pension will also be 20% of my State pension when I get it

But I do feel fortunate, my NHS pension goes up every year and if I die before my husband he gets half of my pension every month.

The NHS doesn’t do a very good job with its employees to keep them informed about their pensions, even your personalised pension statement that you can view online isn’t always accurate. But like everything, you need to do your own research, nothing should come as a suprise, especially tax!

hugheskevi

Amateurretiree said:

The NHS doesn’t do a very good job with its employees to keep them informed about their pensions, even your personalised pension statement that you can view online isn’t always accurate. But like everything, you need to do your own research, nothing should come as a suprise, especially tax!

Poor information to members is a common criticism of public service pension schemes. 

Yet for all of the big schemes, everything a member could want to know is available with no restrictions online - scheme guides, calculators, actuarial valuation reports, annual accounts, scheme rules, underlying legislation, even actuarial factors used for benefit calculation. It is only the smaller schemes such as Armed Forces and Police where the information can sometimes be a bit patchy.

In comparison, it is usually very difficult to find even basic details of private sector schemes, which are usually hidden away within member areas.

Administration of the schemes could often be better, but that just makes it even more important to be engaged with the pension and scrutinising them for errors. There are far too many mistakes made with member pensions, but that is just the way it is, and most can be identified and corrected by members if they are checking their payslips and annual benefit statements.

If members cannot be bothered learning about a key element of their remuneration when all the information they could want is readily available at varying levels of detail to engage with at an appropriate level and fail to undertake checks on monthly pay and annual pension accrual, then at what point do you say the problem is with the member and not with the scheme/employer?

Amateurretiree

hugheskevi said:

Amateurretiree said:

The NHS doesn’t do a very good job with its employees to keep them informed about their pensions, even your personalised pension statement that you can view online isn’t always accurate. But like everything, you need to do your own research, nothing should come as a suprise, especially tax!

Poor information to members is a common criticism of public service pension schemes. 

Yet for all of the big schemes, everything a member could want to know is available with no restrictions online - scheme guides, calculators, actuarial valuation reports, annual accounts, scheme rules, underlying legislation, even actuarial factors used for benefit calculation. It is only the smaller schemes such as Armed Forces and Police where the information can sometimes be a bit patchy.

In comparison, it is usually very difficult to find even basic details of private sector schemes, which are usually hidden away within member areas.

Administration of the schemes could often be better, but that just makes it even more important to be engaged with the pension and scrutinising them for errors. There are far too many mistakes made with member pensions, but that is just the way it is, and most can be identified and corrected by members if they are checking their payslips and annual benefit statements.

If members cannot be bothered learning about a key element of their remuneration when all the information they could want is readily available at varying levels of detail to engage with at an appropriate level and fail to undertake checks on monthly pay and annual pension accrual, then at what point do you say the problem is with the member and not with the scheme/employer?

You make it all sound so easy, but to the normal person on the street it is often like a foreign language.
I took the time to find out about my pension probably only two or three years before retirement, until then I didn’t even know that I had been ‘ contracted out’ and wasn’t eligible for full state pension.

I was aware how much pension I was paying every month, of course I was, I was checking my payslip,and I could see what it said online that my pension would be. But that is often wrong, and trying to get someone, anyone, in the NHS payroll to help is a feat in itself.

MACKEM99

House_owner said:

The golden NHS pension is not a myth, most people working in the private sector can only dream about having such a good pension.

Join the public sector then.

Albermarle

Aretnap said:

Albermarle said:

peter3hg said:

As a professional working in a non-healthcare specific role in the NHS I have been offered roles in the private sector paying 35-50% more than my NHS salary, often for a role with less responsibility.
Ultimately I've always decided to stay in the NHS for a myriad of reasons, but the pension is the main one. If the pension is ever changed to a DC then I'll be straight out the door, because the other benefits of the public sector don't come near to outweighing the lower headline pay.

If I can eke another 10 years out of the NHS pension scheme then that will cover a reasonable lifestyle from state pension age. Any time after that will just bring my retirement date forward.

Ultimately though a change DC pensions would put a big hole in the Government's current deficit. Currently (excluding LGPS of course) the employee's contributions go to pay current pensioners. That contribution is about £10bn a year. If public sector pensions switched to DC the government would initially still have the same pensions to fund but would not be able to use the £10bn from employees and would probably have to put another £10bn in to those DC pensions. That gives them a £20bn a year problem in borrowing terms.
Obviously as the years go by that gap would close and in maybe 15-20 years the government would start seeing the savings but they would have had years of higher initial borrowing to get there.

 I have been offered roles in the private sector paying 35-50% more than my NHS salary, often for a role with less responsibility.
Ultimately I've always decided to stay in the NHS for a myriad of reasons, but the pension is the main one.

Although the NHS scheme is very good, I would think a salary increase of this magnitude ( especially 50%) would more than adequately compensate . Even if you bumped on your contributions by 20%+ ( which is probably what would be needed) you would still be better off .

Without doing the maths, 20% extra contributions sounds rather low if you factor in 

(1) It sounds like he's fairly late in his career, so DC contributions won't have very long to grow before retirement
(2) Less generous indexing on existing accrued pension once he leaves the NHS
(3) Loss of final salary provision on pre-2005 entitlement - significant if he has been in a long time, especially if he hopes to sneak in one final promotion before retirement. 
(4) Whatever value you put on the guaranteed benefits as opposed to being at the mercy of the stock market for your retirement...

I looked into this a while ago when my wife was contemplating moving out of the NHS. I can't remember the exact numbers but the pay rise she'd have needed to have been better off overall was very high. I can certainly believe that 30%+ would work out marginal at best for someone late-ish career. 50% would probably be worth it though.

I was working on the point of 20% extra contributions, as NHS employees do make a % contribution. So I was thinking up to 30% employee contribution and maybe say 7% employer contribution in a DC scheme, should be enough to match the NHS scheme, although calculating the exact figures is not easy.

GrubbyGirl_2

I say all this as an NHS pensioner myself - what planet are you on by suggesting the NHS pension is not gold standard?

You say you worked in acute psychiatry for 38 years and are already drawing both state and NHS pension.  You are therefore probably at least 65 and likely retired from the NHS at 60 and were on the 1995 scheme.  If you worked in psychiatry you would have got mental health officer status so after 20 years contributions each additional year counted as 2 years so you in fact got 56 years contributions so that's 56/80ths of your final salary.  Even if you never got above a band 7 you'd be getting around £50k salary so that's a pension of around £35k per year plus a lump sum of around £100k tax free.  You cannot seriously suggest that it is not a golden pension?

Anyone not on a public sector pension can only dream of that level of pension from the contributions you would have made (and don't forget you paid less NI at the time).  They would be blown away if their employers paid 20% into their pension each and every month.

It's not surprising you get negative responses when you suggest you're hard done by because you have to pay tax on your state pension.  Everybody has to pay tax on their income wherever they work or receive their pension from, you're not being singled out your being required to because you have a good NHS pension and are a member of our society.  Many pensioners only have their state pension so don't have to worry about tax, a state pension that is less than half the national living wage.  It is posts like this that give a bad press to moaning NHS pensioners.  It's nothing to do with bitterness towards NHS staff, it's bitterness towards NHS pensioners who don't realise how good they've got it.

For the record I retired 4 years ago on a brilliant pension after 42 years service (not in mental health so I I don't get 2 years after the 20).  Yes I contributed about 12% of my salary into my pension each and every month and sometimes it was a struggle, but I'm now glad I did.  I get my state pension in 2 years time and I will have to pay 40% back to the government in tax and I do so happily.  I wouldn't be surprised if the state pension become means tested in future so I'm grateful that I am likely to get 60% of something rather than 100% of nothing.  

And while I'm having a moan, NHS staff do not have exclusivity on hard work.  Yes NHS staff do keep us fit and well, but so do gas engineers, plumbers, electricians, builders who all keep us warm and dry, people who work for supermarkets who keep us fed.  We do not have exclusivity on hard work, in fact some of the laziest people I know have worked for the NHS, we do have is exclusivity on emotive work and so many NHS staff play on pulling those heart strings big time.