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  • FIRST POST
    • ConfusedNHSEmployee
    • By ConfusedNHSEmployee 14th Mar 18, 11:39 PM
    • 1Posts
    • 0Thanks
    ConfusedNHSEmployee
    Opting out of NHS Pension
    • #1
    • 14th Mar 18, 11:39 PM
    Opting out of NHS Pension 14th Mar 18 at 11:39 PM
    Hello,
    I am seriously considering opting out of NHS pension and I would greatly welcome your input.
    I am 30 years old, been in the NHS for 8 years, have 40K+ salary, I contribute 9.3% towards my pension and would soon contribute 12.5% through a new position. My employer contributes 14.3%. My pension is linked to the state retirement age which I anticipate would be around 70 in 40 years time. Taking early retirement by 12 years (i.e. retire at 58) would deduct the pot by circa 45%.

    Unlike many millienials I will be mortgage free at 33 and I currently have no debt. I have no kids (will never have any - not interested). My husband is 50 years old.

    Thinking about retirement, I was hoping to do so latest when I am 50 to 55. I can't trust the government that things won't get worse with pensions and I can't envisage I will remain with the NHS for the rest of my life (if it survives!).

    I want to spend as much quality time with my older husband as possible. Would it make sense to opt out of the NHS pension and put that money towards an investment fund that I can draw upon at an earlier point or is the current sitaution better than the alternative.
    If I was to stay, then the best case scenario would be for the pensions rules to remain the same, I would have a very good pension by the time I am 70 but by then it would be too late to enjoy it.

    Ps. As I have no immediate family or anyone to leave anything to, I will opt out to call it a day when I am no longer able to enjoy the joys of life in older age (with any luck around 70 to 80).
Page 1
    • dunstonh
    • By dunstonh 15th Mar 18, 1:24 AM
    • 92,209 Posts
    • 59,375 Thanks
    dunstonh
    • #2
    • 15th Mar 18, 1:24 AM
    • #2
    • 15th Mar 18, 1:24 AM
    I am seriously considering opting out of NHS pension and I would greatly welcome your input.
    You should seek a doctor.

    I can't trust the government that things won't get worse with pensions and I can't envisage I will remain with the NHS for the rest of my life (if it survives!).
    Maybe a psychiatrist? That level of paranoia is worrying.

    Would it make sense to opt out of the NHS pension and put that money towards an investment fund that I can draw upon at an earlier point or is the current sitaution better than the alternative.
    No. That would be absolutely crazy. Instituational. You would have to put nearly 30% of your salary into the fund to come close to matching the benefits of the NHS pension.

    If I was to stay, then the best case scenario would be for the pensions rules to remain the same, I would have a very good pension by the time I am 70 but by then it would be too late to enjoy it.
    Why do you think 70 is too late? At your age, you are statistically likely to make 100.

    What is it with people working in the NHS when it comes to pensions. It has to be the worst informed workforce in the country. No other workforce seems to be as clueless about the pension.

    Honestly, it would be the worst financial decision of your life.
    Last edited by dunstonh; 15-03-2018 at 1:31 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • stoozie1
    • By stoozie1 15th Mar 18, 7:29 AM
    • 539 Posts
    • 467 Thanks
    stoozie1
    • #3
    • 15th Mar 18, 7:29 AM
    • #3
    • 15th Mar 18, 7:29 AM
    Stay.

    It's a no-brainer.

    Also consider a SIPP to take advantage of the extra tax relief once you are a 40% taxpayer and so you dont have to draw your nhs pension quite so early.

    What are your provisions under your husband's pension should he pre-decease you?

    I thought your 2008 scheme component allowed earlier retirement than SRA?
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- 560
    • mollycat
    • By mollycat 15th Mar 18, 8:13 AM
    • 1,035 Posts
    • 2,053 Thanks
    mollycat
    • #4
    • 15th Mar 18, 8:13 AM
    • #4
    • 15th Mar 18, 8:13 AM
    You should seek a doctor.



    Maybe a psychiatrist doctor? That level of paranoia is worrying.



    No. That would be absolutely crazy. Instituational. You would have to put nearly 30% of your salary into the fund to come close to matching the benefits of the NHS pension.



    Why do you think 70 is too late? At your age, you are statistically likely to make 100.

    What is it with people working in the NHS when it comes to pensions. It has to be the worst informed workforce in the country. No other workforce seems to be as clueless about the pension.

    Honestly, it would be the worst financial decision of your life.
    Originally posted by dunstonh
    Nail on the head Dunstonh, thank you.

    This has baffled me my entire NHS career; people who are clever enough clinically to earn a good wage, (in this case 40K) but cannot seem to understand a very simple pension scheme.

    I (happily) try and help people understand the most basic aspects of it on an almost daily basis.

    Can't fathom the "logic" in the OP at all.

    Advice....1. Stay in. 2. Read the easily understandable factsheets to get an appreciation of the huge benefits of your pension.
    • JoeCrystal
    • By JoeCrystal 15th Mar 18, 4:40 PM
    • 1,401 Posts
    • 859 Thanks
    JoeCrystal
    • #5
    • 15th Mar 18, 4:40 PM
    • #5
    • 15th Mar 18, 4:40 PM
    Hello,
    I am seriously considering opting out of NHS pension and I would greatly welcome your input.
    I am 30 years old, been in the NHS for 8 years, have 40K+ salary, I contribute 9.3% towards my pension and would soon contribute 12.5% through a new position. My employer contributes 14.3%. My pension is linked to the state retirement age which I anticipate would be around 70 in 40 years time. Taking early retirement by 12 years (i.e. retire at 58) would deduct the pot by circa 45%.

    Unlike many millienials I will be mortgage free at 33 and I currently have no debt. I have no kids (will never have any - not interested). My husband is 50 years old.

    Thinking about retirement, I was hoping to do so latest when I am 50 to 55. I can't trust the government that things won't get worse with pensions and I can't envisage I will remain with the NHS for the rest of my life (if it survives!).

    I want to spend as much quality time with my older husband as possible. Would it make sense to opt out of the NHS pension and put that money towards an investment fund that I can draw upon at an earlier point or is the current sitaution better than the alternative.
    If I was to stay, then the best case scenario would be for the pensions rules to remain the same, I would have a very good pension by the time I am 70 but by then it would be too late to enjoy it.

    Ps. As I have no immediate family or anyone to leave anything to, I will opt out to call it a day when I am no longer able to enjoy the joys of life in older age (with any luck around 70 to 80).
    Originally posted by ConfusedNHSEmployee
    DO NOT OPT OUT. The cost of opting out will be vastly more than the money you would saved. You mentioned that you will be paying 12.5% so that put you in at least 47,846.00. I will round it up to 48,000 for simple working. Let's say you are a new starter at 48,000 and you contribute into NHS system for 38 years, you would be paying 500 per month gross.

    Assuming that pay rise and cost of living is the same, after 38 years, you would get an index-linked annual pension of 33,600 at 68 (A very simplified working tbh). To get the same thing in private pension scheme, one would need to contribute 2,239 per month or 55% of your salary for next 38 years. And let not get into the ill health retirement and death in service benefit. Compare it to my case for example, I contributed 25% of my salary or 540 per month and according to the pension forecast in 28 years @ 60 and very lucky to put together various pension pot of 60k so far, I would be seeing a level annuity of 6,680 per year so an index-linked annuity would be something like 3,890 assuming that I was seeing a good annual return of 5%.

    In other words, you are paying peanuts for a massive benefit from it.
    Last edited by JoeCrystal; 15-03-2018 at 4:47 PM.
    • AnotherJoe
    • By AnotherJoe 15th Mar 18, 4:59 PM
    • 9,058 Posts
    • 9,956 Thanks
    AnotherJoe
    • #6
    • 15th Mar 18, 4:59 PM
    • #6
    • 15th Mar 18, 4:59 PM
    Hello,
    I am seriously considering opting out of NHS pension and I would greatly welcome your input.
    I am 30 years old, been in the NHS for 8 years, have 40K+ salary, I contribute 9.3% towards my pension and would soon contribute 12.5% through a new position. My employer contributes 14.3%. My pension is linked to the state retirement age which I anticipate would be around 70 in 40 years time. Taking early retirement by 12 years (i.e. retire at 58) would deduct the pot by circa 45%.
    Originally posted by ConfusedNHSEmployee
    Still a great deal, take it.
    • crv1963
    • By crv1963 18th Mar 18, 10:03 AM
    • 268 Posts
    • 623 Thanks
    crv1963
    • #7
    • 18th Mar 18, 10:03 AM
    • #7
    • 18th Mar 18, 10:03 AM
    Hello,
    I am seriously considering opting out of NHS pension and I would greatly welcome your input.
    I am 30 years old, been in the NHS for 8 years, have 40K+ salary. My pension is linked to the state retirement age which I anticipate would be around 70 in 40 years time. Taking early retirement by 12 years (i.e. retire at 58) would deduct the pot by circa 45%.

    Unlike many millienials I will be mortgage free at 33 and I currently have no debt. I have no kids (will never have any - not interested). My husband is 50 years old.

    Thinking about retirement, I was hoping to do so latest when I am 50 to 55.

    I want to spend as much quality time with my older husband as possible. Would it make sense to opt out of the NHS pension and put that money towards an investment fund that I can draw upon at an earlier point or is the current sitaution better than the alternative.
    Originally posted by ConfusedNHSEmployee

    If I was to stay, I would have a very good pension by the time I am 70 but by then it would be too late to enjoy it.

    Ps. As I have no immediate family or anyone to leave anything to, I will opt out to call it a day when I am no longer able to enjoy the joys of life in older age (with any luck around 70 to 80).
    Originally posted by ConfusedNHSEmployee


    I'd say you would be crazy to opt out! I've worked 33 years in NHS (well had a brief stint in the private sector but soon went back to NHS). I have seen a number of really clinically/ managerially competent people opt out- to a person they either regretted it or opted back in at a later date.


    The benefits you get far outweigh the cost to you, it's not just the pension it's all the add on benefits that help.


    You want to enjoy time with your older (20 years?) husband, you could buy extra holidays- this is salary sacrifice so lowers you tax bill so don't just look at the headline figure. You could at a later date go part time/ have a sabbatical- up to a year- ok no pay but you could save the amount to cover your expenditure over a course of some years?


    You could start a personal pension/ SIPP/ ISA savings. What are your husbands plans? His pension? You don't want children now, but the biological clock is funny, some women (and men) do change their minds.


    What I wanted at 30 changed, what I wanted and did at 40 changed and now I want something different at 50+, I always thought that I'd hit 55, retire and enjoy my NHS pension but life, what I feel I can still contribute clinically and my aspirations all changed over time.


    Don't hamstring your future self financially by opting out or your present self with how much it would cost you to get the same benefits that you have now!

    If your husband is 50, in good health and working he has 17 or 18 years left of working life unless he to has earlier retirement plans.


    You don't know what is round the corner- politically- macro and micro will there be an NHS will it offer the role you have or aspire to now? Will you hate your job that you may like now? I went from E- grade to I- grade to 8B grade became disillusioned and am now a happy (ish) Band 6 clinician. I moved around the country and had lots of changes in my personal life. Then there is health the big unknown some people live to over 100 some die at working age. You'd drive yourself mad with worry if you think or more correctly over think every possibility!


    Enjoy life now, invest for the future, an old charge nurse once told me- spend a bit (here and now), save a bit (for anything I wanted, cars/ holidays/ rainy day) and gamble a bit (pension/ investments etc) but to remember that my NHS pension took the risk out of my gamble because if all else failed I'd have a steady, even if not huge income in later life- you can't buy time or class, everything else is a possibility!
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
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