Additional NHS Pension or SIPP?

I am also looking into making additional payments as later starter starting pension and work part time, anyone advise on benefits of paying additional payments into NHS pension than others and how I work out how much more I pay that is more tax efficient?

Hi jscol,


I'd suggest before deciding your best option you look at a couple of other things (sorry to muddy your waters!).


What retirement income are you looking at-


i) Are you both retiring around about the same time? We're in our early 50s (me just!) and want to retire at the same time, so younger by 3 years wife needs a bit more saved to fund that.
ii) How much is your income aim in retirement? As someone probably hitting or approaching LTA and public sector pension you're probably looking at a £40k pa pension? Look at what you think you'll need jointly to fund the retirement you want, look at the whats your number thread for ideas how to work it out?
Work out the minimum you think you'll need, over estimate outgoings and underestimate income to give a favourable margin of error.
iii) How much do you need if she dies first?
iv) How much does your wife need if you go first?
v) Does your wife want to retire before NHS retirement age- probably yes as it will be a minimum of 67, so plan to save into her pension as a guaranteed index income comes from your pension, her NHS pension and SP. You could save in a SIPP maximise contributions and then draw down up to her annual tax allowance (our plan), if you don't need the income you have more options- a) give the children a monthly allowance- any regular gift from income doesn't attract income tax or go against your IHT allowance or if you think you might need it later, put it in an ISA.
vi) Children- at what point will they finish education and how much support are you going to give financially? Are you planning on giving helping hands for weddings/ first house/ car insurance?


We through this forum and a lot of reading up are= maximising my wife pension contributions, drawing this down (when it comes to it) and using it to have as income to match her SP which will kick in about 12 years after she retires. Obviously our pots are not as large as yours but it suits us and is what we think we can manage. We're reckoning her survivors pension from my NHS pension and her SP will be enough for her to live on, plus our lumps sums will create "pots" each for cars, house repairs and if need be care fees (thinking being if I/ she needs care then driving won't be an option!).


Best wishes


CRV


Edit- I'd be biased towards forming a pot that is independent of the public sector to build a pot that allows- even if drawn down to zero- your wife the option of early retirement before NHS pension kicks in. That way she can retire with an unreduced NHS pension. I see little point in buying extra NHS pension years/ income when your pension has the index linking it has, along with her eventual NHS pension and your SPs. You can't buy time together!