Pension

Dazed_and_C0nfused

20122013 said:

As mentioned above, I was a few months short to be eligible to become a NHS pension member.  

The £2713.77 I have contributed  to the NHS Pension Scheme had never been invested  My option are 

1. get a taxable refund or

2. find employment with the NHS within the next 12 months so I can carry the contribution. 

I would not mind working again but unsure whether it is worth working for the NHS for the pension, as I do not understand how pension works. The NHS role I will be applying for will pay about £26000 (to £300000 pa (net)

I had emailed the NHS Pension team about  what is the maximum pension contribution in percentage to my salary I and the NHS can / will make, please?'and their replied :

' All members of the NHS Pension Scheme pay a set contribution towards your pension based on your actual annual gross pensionable pay.

 

If you work part-time, you may pay less as your contribution rate will be based on how much you're paid each year. 

https://www.nhsbsa.nhs.uk/member-hub/cost-being-scheme'

I am unsure how to work out the pension contribution (as I have read other posts that it is taxable or something, my pension value including my SW is less than £100K), welcome your thoughts

Net earnings are irrelevant really for NHS pension purposes, it's your pensionable salary which counts.

For example say that is £30,000.  You would pay 8.3%.  So £2,490.  But the NHS operate a "net pay" pension scheme so your earnings for tax purposes would only be £27,510 (30,000 less 2,490).  So the real cost of that £2,490 is actually only £1,992 as you have avoided paying tax on your pension contributions.

In return you will earn a pension of £555.55.  Which is revalued each year to protect it from inflation.  Whilst in service the revaluation is CPI + 1.5%.  Once deferred it is just revalued by CPI but that should mean your £555.55 retains it's spending power.

What the tabloid press often refer to as a gold plated pension.

20122013

Dazed_and_C0nfused said:

Net earnings are irrelevant really for NHS pension purposes, it's your pensionable salary which counts.

For example say that is £30,000.  You would pay 8.3%.  So £2,490.  But the NHS operate a "net pay" pension scheme so your earnings for tax purposes would only be £27,510 (30,000 less 2,490).  So the real cost of that £2,490 is actually only £1,992 as you have avoided paying tax on your pension contributions.

In return you will earn a pension of £555.55.  Which is revalued each year to protect it from inflation.  Whilst in service the revaluation is CPI + 1.5%.  Once deferred it is just revalued by CPI but that should mean your £555.55 retains it's spending power.

What the tabloid press often refer to as a gold plated pension.

I have found some more information.  ie if I contribute 8.3%, the employer also contributes? and I can also apply for additional voluntary contribution up to £60K / year.  

Before I join the NHS pension scheme, I am wondering whether there is anything else I need to consider,  eg is there a minimum time I need to work for or how much I can withdraw etc.  ?

 

Dazed_and_C0nfused

20122013 said:

Dazed_and_C0nfused said:

Net earnings are irrelevant really for NHS pension purposes, it's your pensionable salary which counts.

For example say that is £30,000.  You would pay 8.3%.  So £2,490.  But the NHS operate a "net pay" pension scheme so your earnings for tax purposes would only be £27,510 (30,000 less 2,490).  So the real cost of that £2,490 is actually only £1,992 as you have avoided paying tax on your pension contributions.

In return you will earn a pension of £555.55.  Which is revalued each year to protect it from inflation.  Whilst in service the revaluation is CPI + 1.5%.  Once deferred it is just revalued by CPI but that should mean your £555.55 retains it's spending power.

What the tabloid press often refer to as a gold plated pension.

I have found some more information.  ie if I contribute 8.3%, the employer also contributes? and I can also apply for additional voluntary contribution up to £60K / year.  

Before I join the NHS pension scheme, I am wondering whether there is anything else I need to consider,  eg is there a minimum time I need to work for or how much I can withdraw etc.  ?

I think it's two years you need to be a member to become eligible for an NHS pension.

Yeh employer contributions are of no real relevance you are entitled to a pension as per the scheme rules.  Your employer contributing 15% or 30% makes no difference to that.

There is nothing you can "withdraw".

Are you sure you really understand how the NHS scheme works?

20122013

@ Dazed_and_C0nfused I am still trying to understand how the scheme works, any information would be welcome.  

A lot to process and limited time left to rejoin the scheme, hence, I am weighing up whether it would be worth joining, compare to other options.  As I am still trying to understand about pensions.

Dazed_and_C0nfused

20122013 said:

@ Dazed_and_C0nfused I am still trying to understand how the scheme works, any information would be welcome.  

A lot to process and limited time left to rejoin the scheme, hence, I am weighing up whether it would be worth joining, compare to other options.  As I am still trying to understand about pensions.

I'm struggling to think of what could be a better option if you work for the NHS.  I wouldn't be surprised if some people get jobs in the NHS specifically so they are in the pension scheme.

Did you understand this example?  The pension earned is 1/54th of your pensionable earnings, often salary but it can be more complicated than that with some roles in the NHS I think.

For example say that is £30,000. You would pay 8.3%. So £2,490. But the NHS operate a "net pay" pension scheme so your earnings for tax purposes would only be £27,510 (30,000 less 2,490). So the real cost of that £2,490 is actually only £1,992 as you have avoided paying tax on your pension contributions.

In return you will earn a pension of £555.55. Which is revalued each year to protect it from inflation. Whilst in service the revaluation is CPI + 1.5%. Once deferred it is just revalued by CPI but that should mean your £555.55 retains it's spending power.

MX5huggy

The bit that causes confusion is “earn a pension of £555.55” which seems a bad deal compared to pay £3600 in to pension and then you have a “pension worth £3600 that will grow”. But it is a very good deal. 

The £555.55 pension is per year from retirement age (probably 67/68, you’ve not said your age I think) till death (there’s dependents pension also payable after death if applicable) as said it’s index linked so will always be worth £555.55 per year. You can also take it early but then it is reduced but only to reflect that it will payed for longer. Work for 10 years and your pension would be £5555 per year (ignoring inflation).

If you wanted to have enough money to have £555 income from it per year you would need approximately £15000 (4% return) and that probably doesn’t cover inflation. 

Increasing your income by working in any role will improve your income and you can pay it into your pension. The NHS pension (or other public sector pensions , local government, civil service, teacher etc) are valuable benefits making up for potentially lower salaries than available in the private sector with less generous pension scheme contributions. 

Silvertabby

This was a common query in my LGPS days.... "I've paid £3,600 into my pension this year, but my pension has only increased by £555 - where's the rest of my money?"

I would explain that, year by year, the £3,600 was a one off payment, whilst the £555 was a fully index linked pension for possibly 20 or 30 years.

Most got it, but a some still struggled to believe me because this was just too good to be true.

LHW99

Silvertabby said:

This was a common query in my LGPS days.... "I've paid £3,600 into my pension this year, but my pension has only increased by £555 - where's the rest of my money?"

I would explain that, year by year, the £3,600 was a one off payment, whilst the £555 was a fully index linked pension for possibly 20 or 30 years.

Most got it, but a some still struggled to believe me because this was just too good to be true.

And while most "too good to be true things" should be regarded as scams, this particular one isn't!

20122013

Dazed_and_C0nfused said:

'Did you understand this example? '

Appreciate you asked (again), as I understand your example. it means if I am on £30K pa and make a pension contribution of 8.3% pa. In return, when I get my pension, I will earn a pension of £555.55 per year.  I had joined the NHS not for the pension scheme, and when I left I didn't realised I needed more months before I was qualified to join, will try to work out how to rejoin.

20122013

@ MX5huggy thanks for taking the time to explain, help me think it through as a lot to read up. I was focusing on getting back to working in a hospital and forgot the whole of NHS

Also. it was helpful to see the amount of money I'd  need to get the £555.5 pa