NHS PENSION 2015 SCHEME OPTIONS

Marineboy1961

Hi I am 64 in 2 weeks 

I have been with the NHS for 1 year and have a very modest salary at 24k but it works for me having come out of sales more money but burned out with it all.

I have had a quote back from the NHS pension 2015 scheme on DC pots worth £137,000 they have come back with an offer pension credit  £396,487 applying the 1/54th formula is equivalent to £7342 pension. 

How much does this figure go up by every year whilst it remains in the 2015 scheme. How would I work this out ? 

Full pension qualifies at state pension age 66 years and 10 months for me, taking it earlier  I would lose 11% if taken 2 years earlier and  6% 1 year earlier.

Thoughts most appreciated as to the pros and cons of waiting for full pension or taking it earlier.

Any other thoughts on strategy please ?

Flugelhorn

I think NHS 2015 is revalued by September's CPI + 1.5%  - so this coming April it will be 1.7%+1.5% = 3.2% - an increase of about £235 

crv1963

Flugelhorn has identified the increases for you so I will look at pros and cons of taking pension earlier..

Pros in payment longer, possibly depending on what else you have saved/ income enough to stop working altogether depending what you hope to have as an income.

Cons if you can do it work to retirement age will give you NHS and SP, which depending on your target retirement income may be enough to cover your needs, taking earlier will reduce overall retirement income.

If you enjoy the work and have no great plans then taking early may be a mistake? If you hate working then taking early may be a good thing as long as it is enough to live on?

Dazed_and_C0nfused

Flugelhorn said:

I think NHS 2015 is revalued by September's CPI + 1.5%  - so this coming April it will be 1.7%+1.5% = 3.2% - an increase of about £235 

Correct for normal NHS CARE pension whilst in service but I think the extra 1.5% drops off once the pension is in payment (or whilst deferred).

Silvertabby

Dazed_and_C0nfused said:

Flugelhorn said:

I think NHS 2015 is revalued by September's CPI + 1.5%  - so this coming April it will be 1.7%+1.5% = 3.2% - an increase of about £235 

Correct for normal NHS CARE pension whilst in service but I think the extra 1.5% drops off once the pension is in payment (or whilst deferred).

Yes, (uncapped) CPI only once deferred/in payment.  

Flugelhorn

Dazed_and_C0nfused said:

Flugelhorn said:

I think NHS 2015 is revalued by September's CPI + 1.5%  - so this coming April it will be 1.7%+1.5% = 3.2% - an increase of about £235 

Correct for normal NHS CARE pension whilst in service but I think the extra 1.5% drops off once the pension is in payment (or whilst deferred).

it does indeed - I had a chunk of the 95 practitioners pension and deferred that for 18/12 - no 1.5% then or since taking it 

Lowtrawler

I suppose the only other point to comment on is the transfer of £137k DC pot into an annual inflation linked pension of £7,342. This is an excellent transfer rate based on a "safe" conversion rate of 4% on the DC pot which would only provide £5,480 with no inflation guarantees. The only reason not to transfer into the NHS scheme would be if you had reason to believe you will have a short life.

Marineboy1961

So helpful thank you all for taking the time to respond with first class advice ... Lowtrawler ...Flugelhorn .. Silvertabby .. Daze and confused .. CRV 1963  

Moonwolf

Flugelhorn said:

I think NHS 2015 is revalued by September's CPI + 1.5%  - so this coming April it will be 1.7%+1.5% = 3.2% - an increase of about £235 

Does the 1.5% apply to bought in pension (apart from transfers from certain other government pensions, club pensions)? 

I always found this difficult to pick through. 

crv1963

Moonwolf said:

Flugelhorn said:

I think NHS 2015 is revalued by September's CPI + 1.5%  - so this coming April it will be 1.7%+1.5% = 3.2% - an increase of about £235 

Does the 1.5% apply to bought in pension (apart from transfers from certain other government pensions, club pensions)? 

I always found this difficult to pick through. 

My understanding is yes, once the sum is agreed and payment started either lump sum or monthly deductions then the sum agreed in total is subject to the relevant CPI plus 1.5% increases.