NHS pension: what should I do?

System

This discussion was created from comments split from: Pensions Planning: The NUMBER.

Bobinyorkshire

Got an NHS estimate to take pension at the end of August 2026. I am 60 in Feb 2027 but due to the placement of unsociable hours it works best to take the 1995 portion then.

Dilemma is over lump sum as I intend to carry on part time after August for a little while (not permanent contract so no assurances).

Small lump sum means I will creep into higher tax bracket with extra work income on top of pension. Larger lump sum means I don’t but impacts on income when fully retired.

Will still be paying into 2015 which will be modest and SP when 67

Any helpful comments welcome

Organgrinder

https://forums.moneysavingexpert.com/discussion/comment/82026103#Comment_82026103

Just a suggestion but if you put any of your income that is in the higher tax bracket into a pension you'll get the tax back and when you finally retire you can take 25% tax free and the rest at 20% (assuming you won't be paying higher rate tax then).

Bobinyorkshire

Thank you. I do have a SIPP I intended to use to bridge the gap before I was 60, but got PT work so carried on working. So could add to that. Not sure of PIA when you’ve already taken 1995, but still paining into 2015. I’ll have to look into that

jimi_man

That’s what I did. Worked very well, though I’m now in the position that I can’t get it all out prior to SP, when I’ll be an HR taxpayer.

But even without that I’d still go for creeping into the larger tax bracket then benefitting from higher income in retirement. Tax is all very well but it’s only part of the picture. If one had the choice of a £60k job or a £50k job then I know what I’d take (all other things being equal).

Bobinyorkshire

Thank you. Lots to think about but need to decide soon

MSE_ForumTeam5

we've split this into its own thread

PropertyGuru_Wannabe

https://forums.moneysavingexpert.com/discussion/comment/82027693#Comment_82027693

no it doesn’t as personal income doesn’t count as recycling.

Bob it depends if you need the money for something you planned or if your personality supports taking the money that is not subject to tax. However give that the commutation rate is poor at 12:1, if I were in your shoes I would definitely not be taking a bigger lump sum and I am normally a massive risk taker.

GrubbyGirl_2

It's obviously a personal decision but if it were me I'd take the higher pension and suck up the tax for a while as do as others have said above and don't forget if you're only just creeping into the higher tax bracket the impact will be fairly minimal. I have been retired from the NHS for 6 years now and my pension has gone up 34% in those 6 years which is a significantly higher rise than I ever got when working. You'll appreciate those rises when they are your only income and of course the bigger your pension the bigger the rise.

If you want to stay under why not just reduce your hours a little?

jimi_man

https://forums.moneysavingexpert.com/discussion/comment/82027843#Comment_82027843

The income is available because he’s working - no other reason. If he’s got pension income to make him better off then great, but it’s the work related income that’s important here.

PropertyGuru_Wannabe

https://forums.moneysavingexpert.com/discussion/comment/82027843#Comment_82027843

Even if the income is only available from pension income, the OP can put £3600 into their personal pension. The OP has said that he intends to continue working part time for a while. The earned income from that part time work will count as relevant earnings so the OP can put any amount up to their relevant earnings into their personal pension which can pull OP back into the basic rate tax bracket if OP is slightly above it.

Anyway, it would not count as recycling whatever way you look at it.