Buying added years

loulou41

Please can somebody advise me on this? My friend works for the NHS and she wants to buy added years and was told she can buy another 3yrs 2 days at an extra 9% until she is 55 yrs in 2011. She started paying in 1993, I think, her annual salary W.T.E will be 20k, she works on nights as a care assistant. She is currently working 30 hrs a week and she asks me whether it is worthy for her to pay 15% in her NHS pension to get that extra years. I do not know the answer and I thought may be somebody on this forum can offer some advice. Thanks

justme111

loulou41 wrote: »

Please can somebody advise me on this? My friend works for the NHS and she wants to buy added years and was told she can buy another 3yrs 2 days at an extra 9% until she is 55 yrs in 2011. She started paying in 1993, I think, her annual salary W.T.E will be 20k, she works on nights as a care assistant. She is currently working 30 hrs a week and she asks me whether it is worthy for her to pay 15% in her NHS pension to get that extra years. I do not know the answer and I thought may be somebody on this forum can offer some advice. Thanks

Sorry I can not offer decent advice. I was loking into the same issue - actually this post reminded me I had to look at it again. I remember I thought it was worth to buy additional years. Why your friend does not call pension office, they send her a brochure where she would be able to see a chart showing how much pension would the one get depending on the pay and amount of years, then she may do the math herself. Or there are some consulting firms for financial plannings for medical professionals, they are usually targeted at the ones earning more but if she is interested to get their details - just say me and I will post them here.

Retired_I.F.A.

She ought to seek out independent financial advice and get an illustration of what a personal pension costing the same could provide then she has something to compare.

m_c_s

Retired_I.F.A. wrote: »

She ought to seek out independent financial advice and get an illustration of what a personal pension costing the same could provide then she has something to compare.

If you do this remember that a personal pension is not guaranteed..your added years are. What price do you put on the guarantee?

dunstonh

What price do you put on the guarantee?

Depends on the critical yield. Sometimes the cost of the guarantee is so high that a relatively low return is needed on the investments to match it.

If the critical yield is 7%, then you may choose to invest. If its higher than 7% then the years option may look more attractive.