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  • FIRST POST
    • 20yearnhsguy
    • By 20yearnhsguy 17th Sep 19, 7:28 AM
    • 9Posts
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    20yearnhsguy
    Early retirement nhs
    • #1
    • 17th Sep 19, 7:28 AM
    Early retirement nhs 17th Sep 19 at 7:28 AM
    Hi
    Iím a 46 year old male - worked for the nhs for 20 years, currently earn about £75k and hoping to retire around 60 (mortgage will be paid off by then) rather than 67 which is the default.
    Just looked into my pension for the first time (I know, I know) and Iíve got about £20k in my pension pot so far. Iím wondering the best way of working towards early retirement? Is it to overpay my nhs pension? Excuse my ignorance! genuinely no idea what my options are!
Page 1
    • Browntoa
    • By Browntoa 17th Sep 19, 7:30 AM
    • 35,632 Posts
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    Browntoa
    • #2
    • 17th Sep 19, 7:30 AM
    • #2
    • 17th Sep 19, 7:30 AM
    So your current estimate says £20,000 a year pension
    I'm the Board Guide of the Referrers ,Telephones, Pensions , Shop Don't drop ,over 50's , Boost your income and Discount Code boards which means I volunteer to help get your forum questions answered and keep the forum runnning smoothly .However, please remember, board guides don't read every post. If you spot an inappropriate or illegal post please report it to forumteam@moneysavingexpert.com Any views are mine and not the official line of MoneySavingExpert.
    • JoeCrystal
    • By JoeCrystal 17th Sep 19, 7:42 AM
    • 1,879 Posts
    • 1,320 Thanks
    JoeCrystal
    • #3
    • 17th Sep 19, 7:42 AM
    • #3
    • 17th Sep 19, 7:42 AM
    Hi
    Iím a 46 year old male - worked for the nhs for 20 years, currently earn about £75k and hoping to retire around 60 (mortgage will be paid off by then) rather than 67 which is the default.
    Just looked into my pension for the first time (I know, I know) and Iíve got about £20k in my pension pot so far. Iím wondering the best way of working towards early retirement? Is it to overpay my nhs pension? Excuse my ignorance! genuinely no idea what my options are!
    Originally posted by 20yearnhsguy
    You going have to understand how the NHS pension scheme works for a start. Read up on the scheme booklets or website about it.
    • 20yearnhsguy
    • By 20yearnhsguy 17th Sep 19, 9:42 AM
    • 9 Posts
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    20yearnhsguy
    • #4
    • 17th Sep 19, 9:42 AM
    • #4
    • 17th Sep 19, 9:42 AM
    Thx browntoa
    Yes thatís right - I was in the 1995 scheme now in the 2015 scheme, looking at my total reward statement it looks like so far Iíve built up around £20000 pension per year if I stay til age 67. Looks like about £1000 will be added each year to this figure if Iíve read it right. But if I wanted to retire at 60ish, Im wondering how much Iíd get - obviously much less. I had a go at the early retirement calculator - but maybe I need to pay for a projection (£75 I think). Basically Iím wondering if overpaying into my nhs pension from now til retirement is the most sensible option to enable early retirement at 60ish with a decent pension. just after general advice about initial steps to take as a total pension newbie!
    • Twoplus
    • By Twoplus 17th Sep 19, 10:34 AM
    • 42 Posts
    • 22 Thanks
    Twoplus
    • #5
    • 17th Sep 19, 10:34 AM
    • #5
    • 17th Sep 19, 10:34 AM
    The normal pension age for the 1995 scheme is 60 so you can take this pension age 60 without reduction. As you know you won't be able to take from the 2015 scheme without reduction.
    You can buy additional pension in the NHS which is usually considered very good value, which will increase your yearly pension and is paid at the same time as your 2015 scheme.
    Alternatively you can start your deferred contribution scheme, this money can be taken currently at age 55 and you have total control over how much you take out each year. However this money will be invested so there's a risk. You can also leave any that is left in you will.
    • GunJack
    • By GunJack 17th Sep 19, 10:41 AM
    • 10,800 Posts
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    GunJack
    • #6
    • 17th Sep 19, 10:41 AM
    • #6
    • 17th Sep 19, 10:41 AM
    Just a rough stab....

    age 40, pension so far £20k p.a.
    accruing £1k per year service
    est. pension @ age 60 £40k p.a.
    minus approx. 33% actuarial reduction for early payment of pension to retire @60 £13.2k
    approx. pension @ 60 £26.8k p.a.

    none of this allows for how the pension is increased by CPI+whatever p.a., or payrises, promotions, etc...

    edit - if at age 60 your 1995 scheme is paid unreduced, then the actuarial reduction above will be less (and confined to just the 2015 part), so higher pension p.a.
    Last edited by GunJack; 17-09-2019 at 10:44 AM.
    ......Gettin' There, Wherever There is......

    I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple
    • GunJack
    • By GunJack 17th Sep 19, 10:47 AM
    • 10,800 Posts
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    GunJack
    • #7
    • 17th Sep 19, 10:47 AM
    • #7
    • 17th Sep 19, 10:47 AM
    p.s. taking the NHS pension early may be beneficial in LTA terms, so if you do look at a SIPP/Personal pension as well, just be careful your total pensions value won't breach LTA and cause other (tax) problems...
    ......Gettin' There, Wherever There is......

    I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple
    • 20yearnhsguy
    • By 20yearnhsguy 17th Sep 19, 11:49 AM
    • 9 Posts
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    20yearnhsguy
    • #8
    • 17th Sep 19, 11:49 AM
    • #8
    • 17th Sep 19, 11:49 AM
    Thanks both - really helpful
    Iíd forgotten about being able to take the 95 scheme pension at 60 - thatís about 14k as I recall - not a bad start, but not quite there yet
    GunJack - that is v reassuring - those sums look roughly the same as my calculations - v helpful to know
    Iím gonna try to work our how much more Iíd need to contribute over next 15 yrs or so to increase my pension so it equates roughly to what Iíd get at 67
    First time using these forums - extremely helpful so far. Iím working out my spending and predicted spending in retirement now too from reading other threads
    • atush
    • By atush 17th Sep 19, 2:56 PM
    • 17,962 Posts
    • 11,401 Thanks
    atush
    • #9
    • 17th Sep 19, 2:56 PM
    • #9
    • 17th Sep 19, 2:56 PM
    Think about starting a PP/or Sipp. This is a DC pension which can be taken at age 55 (or in your case 60). You'll need to save up enough that you can use this pot to live on until your NHS pension pays out at 67.

    While you can take your NHS pension at age 60, it will be reduced for taking it 7 years early. possibly reducing by around 35%. And if you are in good health and will live a long time thats a big reduction.

    Alternately, if you are OK with reducing your pension at 60, then the DC pot can give you a TFLS, and addition ad hoc income when required.
    • MaxZorin
    • By MaxZorin 17th Sep 19, 4:07 PM
    • 13 Posts
    • 2 Thanks
    MaxZorin
    Google ĎMcCloud Judgementí as this will impact your 2015 scheme. Exactly how isnít clear at present and wonít be for sometime. However it may result in a return to the earlier scheme.
    • 20yearnhsguy
    • By 20yearnhsguy 19th Sep 19, 1:25 PM
    • 9 Posts
    • 0 Thanks
    20yearnhsguy
    Thanks - Hadn’t really thought of a sipp but just looked into it a bit. I’m 46 now so and by age 60 I will have worked into the nhs for 35 yrs
    One plan might be to -
    Pay into a sipp for next 15 yrs or so
    Retire at ?62 taking my sipp and 95 pension
    Then at 67 take my nhs 2015 pension and state pension
    What do you guys think of this plan? Obviously I will be looking into it in detail but do you think this is generally feasible?

    Forgive my ignorance - one thing I don’t understand in my plan: by 62 I’ll have 35 years service in the nhs. If i retire at this age, but don’t collect my 2015 pension until I’m 67, will I still get the same pension as if I continued working until 67, or not?
    Thx for any pointers
    • GunJack
    • By GunJack 19th Sep 19, 1:55 PM
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    GunJack
    I don't know the NHS scheme in detail, but you may not be able to take the two sections pensions at different times, it may be all or nothing, e.g. if you retire at 60 the 1995 section will pay unreduced, but the 2015 part may have actuarial reduction for the 7 or 8 years until scheme retirement age...

    e.g. if, at 60, your 1995 part is worth £25k p.a. and your 2015 part is worth £15k p.a., you could find your pension is worth 25k+(15k-7 years actuarial reduction@ 5% p.a. so about a third), so £25k+£10k=£35k p.a. I tried to mention this in the earlier post.

    Someone more au-fait with the NHS scheme could comment, hopefully?
    Last edited by GunJack; 19-09-2019 at 1:59 PM.
    ......Gettin' There, Wherever There is......

    I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple
    • Twoplus
    • By Twoplus 19th Sep 19, 3:59 PM
    • 42 Posts
    • 22 Thanks
    Twoplus
    You don't need to take both schemes together, however there is a big but. You can't continue paying into the 2015 scheme when you are taking your 1995 pension. My trust offer to pay into s nest pension for those who want to take their 1995 scheme but continue to work to meet their legal responsibility to provide a pension.
    You can either take your 2015 scheme reduced for early payment or defer it until scheme retirement age.
    Have you had a look at early reduction buy out, on the NHS pension site, it may be worth considering.
    • 20yearnhsguy
    • By 20yearnhsguy 19th Sep 19, 5:46 PM
    • 9 Posts
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    20yearnhsguy
    Ok great thx both good to know I’m able to take them at different times - think I’m going to speak to my trust / nhs pension helpline and see what my options are at this point. Think it’s sensible planning now for options in 15-20 yrs time, I might post again with an update of my plan once I’ve learnt more
    • Pocket9s
    • By Pocket9s 19th Sep 19, 7:32 PM
    • 35 Posts
    • 65 Thanks
    Pocket9s
    What is your target retirement income?
    You should take the 1995 pension at age 60, it won’t be enhanced by delaying taking it.
    You have 16 years in the 1995 section which has an accrual rate of 1/80 which will give you 15k per year, as well as a 45k tax free lump sum in today’s money at age 60.
    Start paying into a SIPP as soon as possible, try and at least pay in enough to push you out of the 40% tax bracket. Then need to judge whether to contribute the rest of your available monthly savings to a SIPP or an ISA

    Age 60 you will then have your 1995 pension, can then draw heavily on your lump sum, SIPP and ISA over the next 7 years to supplement your income. Or work part time/step down to a less demanding role part time to supplement as well. I would plan to not be working as then you are not forced to. NB as earlier poster said once you take the 1995 pension you can’t build any more in the 2015 scheme

    Age 67 you will then have your 15k 1995 pension, and your 19 years in the 2015 scheme - this has an accrual rate of 1/54 at present so will give you approx 26k in today’s money (with no lump sum). Plus the state pension approx 8k. So a total of almost 50k in today’s money, plus whatever is left in your SIPP and ISA.

    The above is subject to change as they may change the rules in the next few years, but should give you a rough guide.

    Keep your spending reasonable should be retiring in a very good position.
    • spaniel101
    • By spaniel101 19th Sep 19, 7:55 PM
    • 50 Posts
    • 14 Thanks
    spaniel101
    You can find all you need to know here;


    https://www.nhsbsa.nhs.uk/member-hub


    Very informative NHS Pensions website, they also have a 'knowledge base' for any questions you may have.


    "Pay into a sipp for next 15 yrs or so
    Retire at ?62 taking my sipp and 95 pension
    Then at 67 take my nhs 2015 pension and state pension"


    This is my plan as above, albeit I can draw my 1995 section @ 60, and continue to pay into 2015 scheme (if I continue working) as I had a break of 5 years (or >) between sections.


    In addition, I have paid added contributions into 2015 plus ERRBO (early reduction buyout of 2 years max), therefore could draw 2015 scheme at 65 (as oppossed to 67) without reduction.


    I also have a SIPP to bridge.




    • Jitter
    • By Jitter 20th Sep 19, 9:37 PM
    • 21 Posts
    • 21 Thanks
    Jitter
    I'm far from an expert on this but having recently been working out figures for my wife...

    You have not got a pension pot as such, your pension will be calculated on your final pensionable pay e.g. the 1995 section is calculated on 1/80 x final pensionable pay x years of membership - so for example if leading up to retirement you end up on a higher salary your final pensionable pay will be more, or vice versa if for example ill health/caring for elderly relatives forced you to reduce your hours.

    The best way to work towards early retirement is get promoted as high as you can in the NHS for a couple of years then take the NHS pension and a nice part time stress free job somewhere else!
    • 20yearnhsguy
    • By 20yearnhsguy 27th Sep 19, 12:17 PM
    • 9 Posts
    • 0 Thanks
    20yearnhsguy
    Thx so much pocket9x - that looks like a pretty good plan to me - Iím gonna look into this in more detail but it looks like a great plan.
    Iíve gone from a total novice, not even knowing how pensions worked embarrassingly, to making a pretty good stab at a plan in just a month, thx to you guys on this site - really tremendously helpful.
    Once Iíve arranged something Iíll post it back on here
    • 20yearnhsguy
    • By 20yearnhsguy 27th Sep 19, 1:27 PM
    • 9 Posts
    • 0 Thanks
    20yearnhsguy
    Spaniel101 - thx - and v reassuring that youíve basically the same plan. Iíll look into the errbo too as that sounds like a good idea too
    • toothdoctor
    • By toothdoctor 27th Sep 19, 1:38 PM
    • 55 Posts
    • 29 Thanks
    toothdoctor
    With regards to paying into a sipp as well, just do your calculations so that you don't exceed the annual allowance limit of 40k(although you can carry your previous 3 years unused allowance forward). With the NHS pension the annual allowance is calculated against the growth of the pension rather that the actual superannuation payments you have made each months.
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