NHS buying additional years

butterfly72

I've been paying into the NHS scheme for 6 years and am interested in buying extra years. I've just found out that the scheme is changing soon and I would need to contact the pensions department before the end of this month to benefit from the current scheme. Out of interest does anyone know the benefits of the old scheme compared to the new scheme? I had a quick look on the NHS pensions site.. but didn't really understand it.:o or how I would be better off.

many thanks.

Ian_W

Hi butterfly72,
Don't wish to appear rude but without knowing anything about you it's impossible to know how, or even if, you'll be better off or what particular parts of the changes you would consider relevant now or in the future.
The existing scheme will change on 1/4/08 and a totally new scheme will be introduced for those joining the NHS after that date. This WEBPAGE shows the changes by comparing the current scheme benefits with those applying to existing members after 1/4 and those of the scheme for new entrants.
If you do want to buy additional years you will have to notify your pensions dept of your interest in doing so very quickly. Additional years are expensive as you have to pay the notional full cost rather than just the employee contributions because the extra years benefit you not the employer. That isn't to say it isn't worth it - Mrs W certainly thinks it is as she can retire on full pension 4yrs earlier [and 4yrs younger!] than if she hadn't bought them.
BTW I'm surprised you've only just found out about the changes as she's had lots of info over the several years these have been discussed, not least an attachment to her pay slip quite recently showing the increase in contributions to 6.5% from April.
Hope that helps.

firesidemaid

do you mean additional years or additional voluntary contributions?

have you worked some years that you did not pay pension or that you cashed in? or do you just want to put extra money in?

butterfly72

Thanks for the replies. Firesidemaid.. i'm sure its additional years i'm interested in! Thanks Ian for the link.. i'll have a look and see if I can make sense of it. I didn't get any info re the new scheme and may have missed out recently on any bumf as I've just changed jobs. I only found out as I saw an article in the telegraph whilst browsing the net!

I'm still not sure its worth it. I'm 36, a nurse and have been paying in for 6 years (haven't missed any years i've been working.. only joined the NHS 6 years ago and payed in from day one). I intend/hope to take a couple of maternity breaks in the not too distant future and will always work.. even if its part time. I've no idea when I'll retire. I wish the trusts would run pension clinics.. i'd go!! I just want to get the best pension I can.. even if its tiny!

Any more advice?

thanks

Sobraon

You could analyse this for months but you have about 10 days! Suggest you consider reserving your position by making an application, you can always withdraw (check this is true by email with NHS pensions).
The government needs to reduce the cost of public pensions. They are withdrawing the ability to buy past added years (PAY). So, to my simple mind if they are doing away with the facility it must be because it is expensive for the government and therefore of benefit to the individual contributor.
Once you have reserved your position a careful review with the help of the pension scheme admin (they will answer factual questions by email) and the RCN (or equiv) may be best.
I know a number of teachers who 'missed out' on PAY when the facility was removed 15 months or so ago. And the replacement 'money purchase' scheme seems not as good particularly for 'young in service people'.
Sobraon

Spirit_2

When buying added years, the contract usually comes into effect from your next birthday, so you may be too late to beat the April 1 changes. Although the gross cost seems expensive it is tax deductible and as it has been a final salary scheme generally this has been a "good buy".

Good luck
Spirit

butterfly72

I think I will contact them by phone on Tuesday and register my interest! I'd hate to miss out on something good because I didnt understand it!

thanks all.

Ian_W

Added years contracts are set up to start from the member’s next birthday. Existing scheme members can purchase added years by the current method if they start the contract (on their birth date) on or before 31 March 2009. So if a member’s birthday is 25 February, they can either start their contract on 25 February 2008 or 25 February 2009. If their birthday is on 6 June, they can only start their contract on 6 June 2008.
However there is one important rule. To start a contract on a birth date after 31 March 2008, the member must have at least made an expression of interest by that date (ie 31 March 2008). An expression can be:
• A quotation/comparison request about added years
• A telephone, written or email enquiry about taking out an added years contract
These expressions of interest can be made to either NHS Pensions at our postal or email address or to the member’s employing organisation.

From HERE.
So if you do express on interest or better still ask for a quote you'll have until your next birthday to decide if it's worthwhile.
Your normal retirement age will be 60 so you could earn 30/80ths, although your P/T service will only count pro-rata, or you could work longer to gain more pension :eek:.
Nurses [and some others] who joined the scheme pre 1995 can retire at 55 and the missus bought added years so she has a full pension at 55. They're officiall called the Special Classes but their pensions bloke calls them the Golden Girls!
You won't have a full pension by retirement age but if you carry on in the NHS until then you should have a quite substantial one.

firesidemaid

i may have got it wrong, but i thought you couldn't buy 'additional' years that you haven't already worked.

so, if you have worked in the nhs for 6 years, that is all you are entitled to so far unless you want to buy avcs - although that scheme is changing too.

can anyone verify this please?

Retired_I.F.A.

When you buy added years you pay the full price of them their is no employer contribution involved thus vast majority of people choose the money purchase route to top up their pension where they have choice and control of the investment.

You can buy added years bringing the total to above those you have worked . The typical 60th's scheme requires 40 years membership to get the maximum 40/60th pension but that's the scheme rules, 40/60th could be had with only 10 years service under the Inland Revenue rules that applied when I last worked in the industry 6 years hence it may be less now.

butterfly72

Thanks for the replies. What exactly does this 40/60th and 30/80th mean and how is it worked out? Also what impact does maternity leave have on a pension?

thanks