NHS Pension

Sarah69

Hi, 

I’ve worked for the NHS for over 9 years and always opt out of the pension as I can’t afford the monthly amount. So I assume that I will get no pension when I retire. However today I was told by another employee that the NHS still pay into a pension, is anyone able to clarify this please? 

itsthelittlethings

I don't think you get an NHS pension for free if you don't pay towards it. Sorry.

QrizB

No, if you opt out the NHS don't pay anything.

Your employer's pension contributions (if you opt in) are part of your pay package. By opting out you've taken a ~20% pay cut.

Everyone on this forum, including me, will recommend that you opt back in immediately.

Silvertabby

By opting out of paying your own contributions, you have also forfeit the generous amount that your employer would have paid in.  So, no pension and none of the other benefits that NHS pension membership includes (death in service, surviving dependents pension, ill health pension, generous redundancy arrangements if you are over 55/57, etc).

Everyone on these boards will be shouting the same thing at you.....OPT IN TOMORROW !

hugheskevi

However today I was told by another employee that the NHS still pay into a pension, is anyone able to clarify this please? 

The other employee may be confusing the positon now with the position before 2016. Back then, if you opted-out of the NHS pension you would build up extra State Pension (called State Second Pension). But that all ended 10 years ago, and if you opt-out today you don't get anything aside from a small increase to net pay.

I’ve worked for the NHS for over 9 years and always opt out of the pension as I can’t afford the monthly amount.

This is a financial decision comparable to borrowing on credit cards - you get a small amount extra today in exchange for much, much, less in the future.

Assume you earn £30,000 p/a. Over 9 years you would contribute £22,410 to the NHS pension. In return you would have a pension payable from State Pension age of £5,400 p/a. So in about 5 years of the pension being paid you would recover everything contributed, and everything after that is extra. Life expectancy at State Pension age is about 20 years, so that is 15 years of £5,400 p/a lost, or around £80,000.

Marcon

Sarah69 said:

Hi, 

I’ve worked for the NHS for over 9 years and always opt out of the pension as I can’t afford the monthly amount. So I assume that I will get no pension when I retire. However today I was told by another employee that the NHS still pay into a pension, is anyone able to clarify this please? 

How about asking the fellow employee - or more accurately, ensuring they understand they are wrong and stopping them from potentially misleading other people. The only pension you are building up is your state pension, courtesy of employer and employee NI contributions, so possibly that's what they have in mind?

I'm not going to join the chorus of 'join now!' because if you can't afford something you can't have it. That said, you might consider whether there is any way you could afford to join, bearing in mind you will get tax relief on your contributions. Have you looked at the impact on your take home pay? It may not be as bad as you fear.

Brie

I suggest you also have a look at what you might get from the state pension (link below).  It might scare you to consider if you can live on that amount.

Don't forget that there are normally tax/NI savings when you pay into a work pension.  So the actual hit to your take home pay may not be as hard as you think.  And if you opt in when there is even a small salary increase you probably won't even notice the difference.  

QrizB

I think the OP is on £24k pa:

https://forums.moneysavingexpert.com/discussion/6596029/nhs-banding

Employee contributions will be 6.5% (per here), £1560 a year gross, £1248 net. £104 a month.

In exchange for which you'd get a 1/54 pension entitlement of £444 a year. Payback in three-and-a-half years.

JoeCrystal

Sarah69 said:

Hi, 

I’ve worked for the NHS for over 9 years and always opt out of the pension as I can’t afford the monthly amount. So I assume that I will get no pension when I retire. However today I was told by another employee that the NHS still pay into a pension, is anyone able to clarify this please? 

That is crazy in my books. It also means you don't have access to other benefits, such as death-in-service benefits and ill-health retirement options. First of all, I would like to thank you for saving taxpayers a vast amount of money by not needing to pay you when you reach retirement age. Thank you for your sacrifice in giving up at least a third of your salary which your employer does not need to pay, and for your great efforts in saving the Treasury the amount of money to support you during your retirement is greatly appreciated. I am beyond grateful that you are helping in reducing the number of staff on taxpayers-funded pension schemes! Thank you! Really! 

If you do not pick up sarcasm in my post, opt in right away; it costs peanuts for the immensely generous pension scheme. Especially as QrixB point out, you will get all your contributions back very quickly. Especially it is cheaper since you don't have income tax on it.

Emmia

Opting out is (and I'm sorry there is no other way of putting this) utter insanity. 

Recovering your position now, vs. what you could have had if you'd not opted out is going to be very, very expensive for you.

Please sign up to the pension as soon as possible. The pension is a key benefit of working for the NHS or in another public sector employer. The death in service is another benefit that you're currently forgoing.

Sarah69

I simply cannot afford the contributions it would be over £200 a month. I literally live month to month and can’t afford to save even £50 a month!