Help needed with NHS pension

PINEAPPLE1234

Hi, please can anyone give me some advice re NHS pension. I have looked online and read a few articles but feel like Im even more confused. I am unable to speak to the Pensions people in my trust because they are too busy and have just sent me online links when I asked for advice and help.
I was 60 last year and started my pension 1998. I belong to 1995 scheme and 2015. I was tapered out of 1995 scheme in 2018.
I currently work just short of full  time hours and wanted to reduce my hours and take my pension but also wanting to continue paying into my pension.
Have looked at retire and return and partial retirement not sure what would be better, what about the lump sum, take more or less, personal choice and circumstances I know should make me decide but unsure will this be affected by the Mc Cloud judgement also what are the tax implications for taking a lump sum.
Thank you for any help posted.

saucer

Regarding the lump sum, this applies to 1995 part of the scheme only. As a minimum you will get a lump sum, tax free, equivalent to 3 times your annual 1995 pension. You can opt to take a bigger tax free lump sum, at a cost of £1 annual pension (which would rise with inflation) for £12 tax free cash. That’s generally poor value unless you badly need the cash. 

Regarding the McCloud, the impact of that for you is that your 1995 is likely to have extended to March 2022 rather than 2015. So more 1995 pension, payable in full at 60, rather than 2015 pension payable at 66, 67 or later. 

In some cases the 2015 is better but generally only if people intend to work well beyond 60 at full time, or near full time. 

CORRECTION: What do you mean when you say you tapered out of 1995 pension? That might affect what I suggested. If you mean that you tapered to the 2015, that would be affected by McCloud to allow you more time in 1995 if that is to your financial benefit.

Have you read all the information on retire and return e.g. https://www.england.nhs.uk/looking-after-our-people/the-programme-and-resources/pensions-and-flexible-working-in-your-later-career/retire-and-return/

Purplelady65

The pensions teams in NHS Trusts tend to just do the administration and processing of pension application forms before they go to NHSBA. They will not be able to give you any advice as they are not financial advisors and tend not to provide much information around options either.  If you go onto the NHSBA website they have a range of videos to watch and they sometimes run webinars but they will also not be able to provide advice. Re taking your pension but continuing to pay in you could take your benefits from the 1995 scheme and then continue to pay into the 2015 scheme. However you would need to retire and return or reduce your pay by 10% for 12 months as part of the new arrangements that came in last year. 

https://www.nhsbsa.nhs.uk/nhs-pensions

GrubbyGirl_2

Echo what's been said above.  As for the tax implications of the lump sum there are none as the lump sum is paid tax free.

Sim_2

Hi you need to be doing exactly what you say asap as you have already lost payments you will not get back. There are thousands in the same situation. There is an excellent Facebook group with ordinary folk supporting those looking to claim their NHS pensions. Search NHS Pension Chat, there are resources posted and some very knowledgeable and helpful members.

curlytop12

Sim_2 said:

Hi you need to be doing exactly what you say asap as you have already lost payments you will not get back. There are thousands in the same situation. There is an excellent Facebook group with ordinary folk supporting those looking to claim their NHS pensions. Search NHS Pension Chat, there are resources posted and some very knowledgeable and helpful members.

Hi,  Pineapple1234 won't have lost money, she joined pension in 1998, so won't have special class status I believe?

I was coming on the recommend the nhs pension chat on facebook too- I've just received my 1995 lump sum ( I DID have scs so could have at age 55)  The fb group has been a fantastic help.

I retired and returned, kept same hours, and continue to pay into 2015 . Lump sum is tax free, monthly pension is taxable- The HMRC app is easy to use to update all this.

Sim_2

Sorry currleytop12 but she is over 60 so SCS does not come into it and what I said is right.

kaMelo

curlytop12 said:

Sim_2 said:

Hi you need to be doing exactly what you say asap as you have already lost payments you will not get back. There are thousands in the same situation. There is an excellent Facebook group with ordinary folk supporting those looking to claim their NHS pensions. Search NHS Pension Chat, there are resources posted and some very knowledgeable and helpful members.

Hi,  Pineapple1234 won't have lost money, she joined pension in 1998, so won't have special class status I believe?

I

They won't be 'losing money' in the normal sense but @Sim_2 is correct in regard to the 1995 pension scheme in that people will be worse off if they don't claim their 1995 pension as soon as they reach their normal pension age, whether that's 60 or 55 with SCS.  From April 2022 no one could accrue any more years into the 1995 pension scheme, even with a significant salary increase upon which the pension is calculated, deferring is almost never going to work out better in the long run.

 I ran a spreadsheet to try and work things out, which unfortunately I can't seem to find at the moment, but to give an example from memory:
Someone aged 55 with SCS on top band 7 deferring for five years and instead retiring on band 8d at age 60. They would have to live to around age 97 to start to be better off financially just in terms of money paid from the pension, If I then added in a nominal return for the money someone would have had in their possession for five years they would have to live to be the oldest person in history.

NaughtiusMaximus

Apologies for the thread resurrection, my queries aren't quite the same as the OPs but do directly relate to some of the subsequent comments so thought here was a better option than a new thread.

As is traditional for someone who's just turned 50, I'm in the process of planning my retirement. I've been with the NHS for just over 20 years, I was paying into the 1995 scheme until 2022 and the 2015 scheme since then. I'm currently overpaying on our mortgage with the aim of paying it off in full before I reach 60. I also have a much smaller pension from a previous employer, payable from age 65.

Purplelady65 said:

 Re taking your pension but continuing to pay in you could take your benefits from the 1995 scheme and then continue to pay into the 2015 scheme. However you would need to retire and return or reduce your pay by 10% for 12 months as part of the new arrangements that came in last year. 

To clarify, are you saying that in my situation if I wish to start claiming from the 1995 scheme at the age of 60 while still working and contributing to the 2015 scheme, I would need to do either of the two steps mentioned, for example by dropping from full time (37.5 hours) to 30 hours per week, something I was considering anyway when the mortgage is paid off?

kaMelo said:

They won't be 'losing money' in the normal sense but @Sim_2 is correct in regard to the 1995 pension scheme in that people will be worse off if they don't claim their 1995 pension as soon as they reach their normal pension age, whether that's 60 or 55 with SCS.  From April 2022 no one could accrue any more years into the 1995 pension scheme, even with a significant salary increase upon which the pension is calculated, deferring is almost never going to work out better in the long run.

 I ran a spreadsheet to try and work things out, which unfortunately I can't seem to find at the moment, but to give an example from memory:
Someone aged 55 with SCS on top band 7 deferring for five years and instead retiring on band 8d at age 60. They would have to live to around age 97 to start to be better off financially just in terms of money paid from the pension, If I then added in a nominal return for the money someone would have had in their possession for five years they would have to live to be the oldest person in history.

That touches on my other query which is:

Assuming I dropped my hours anyway as per my previous example, is there any benefit to NOT claiming the 1995 pension at 60, your comment suggest no unless I'm misreading it?

If I understand correctly, due to the 2015 scheme being based on career average salary rather than final salary, the hit on my 2015 pension from dropping my hours would only apply to contributions made after switching to part time?

Moonwolf

Yes, you need to retire and return or reduce your hours.

No, if you are still working for the NHS, unless you think your salary will leap from say Band 4 to Band 9 then there is no benefit to not taking it early. Each year you don’t take it you lose a year’s pension which can’t be backdated but it only grows by your change in final salary which for most people is in the same ballpark as inflation, which it grows by anyway. 

hyubh

NaughtiusMaximus said:

If I understand correctly, due to the 2015 scheme being based on career average salary rather than final salary, the hit on my 2015 pension from dropping my hours would only apply to contributions made after switching to part time?

Same would apply if the CARE scheme never happened, given final pensionable pay for final salary benefits = whole time equivalent...