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Opting out NHS if service will be <2 years
cosim
Posts: 1 Newbie
Hi
I'm joining the NHS but will definitely not be staying for 2 years. From what I can work out, if you stay for less than 2 years you are forced to refund your pension contributions or transfer out- but there are very few schemes that will accept it unless you're getting another public sector job. In this instance does it make sense to opt-out of the NHS pension and instead contribute to a private pension, because I'll be missing out on the interest while its sitting with the NHS?
I also see that they don't make you refund it if you transfer a pension in... is it worth me starting a private pension for the sole purpose of transferring it in, no matter how small the value, to guarantee me a deferred NHS pension, if only with a year's worth of contributions? Or will the compound interest on a private pension with 6k in it be worth more in 40 years than 1 year's worth of NHS pension contributions? For reference am in late 20s.
I'm joining the NHS but will definitely not be staying for 2 years. From what I can work out, if you stay for less than 2 years you are forced to refund your pension contributions or transfer out- but there are very few schemes that will accept it unless you're getting another public sector job. In this instance does it make sense to opt-out of the NHS pension and instead contribute to a private pension, because I'll be missing out on the interest while its sitting with the NHS?
I also see that they don't make you refund it if you transfer a pension in... is it worth me starting a private pension for the sole purpose of transferring it in, no matter how small the value, to guarantee me a deferred NHS pension, if only with a year's worth of contributions? Or will the compound interest on a private pension with 6k in it be worth more in 40 years than 1 year's worth of NHS pension contributions? For reference am in late 20s.
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Comments
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I'm joining the NHS but will definitely not be staying for 2 years. From what I can work out, if you stay for less than 2 years you are forced to refund your pension contributions or transfer out- but there are very few schemes that will accept it unless you're getting another public sector job.
The latter shouldn't be the case - it should only hold if you are a member for over two years, and therefore have earned a pension in the scheme. In practice there may be a bit of aggro in getting your desired DC plan to realise the fact, however the distinction is crystal clear in law.In this instance does it make sense to opt-out of the NHS pension and instead contribute to a private pension, because I'll be missing out on the interest while its sitting with the NHS?
No, because a bit of aggro to transfer out won't make the CETV not worth having. Also, a secondary reason is that you may end up staying longer than two years anyway.I also see that they don't make you refund it if you transfer a pension in... is it worth me starting a private pension for the sole purpose of transferring it in, no matter how small the value, to guarantee me a deferred NHS pension, if only with a year's worth of contributions?
Possibly - it depends whether small, guaranteed DB pension with limited flexibility is desirable to you or not. (Unfunded public sector pensions are the safest, most risk-free possible.)0 -
I've no experience with NHS but I was in a similar position with the Civil Service, leaving after around 20 months, and was able to transfer over to a personal pension set up with Aviva. It was certainly worth doing as the amount transferred was over 5 times my contribution.0
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but there are very few schemes that will accept it unless you're getting another public sector job.
Virtually all schemes will accept it.
The country is full of people who only intended to stay with a company for a year or two but 20 years later are still there. you never know.....I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Don't opt-out. Take the free money. Hope you make it to 2 years service.0
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Hey Cosim
I was like you when I joined the NHS, I only took the job because of my circumstances at the time and I thought I would do it for a year and probably go back to the private sector. The one bit of useful advice given to me by the HR person was opt in to the pension scheme "it is a no-brainer - they put in 14 per cent" she said. So after more than 10 years I left with a nice DB pension waiting for me in the future.
You may not like the job or team or particular organisation you are working for currently but remember the NHS is huge, you can go on secondment to other orgns and your employment remains with NHS, you can even go abroad as many countries learn from the NHS model, and of course as pointed out above you can move your pension out to a new employer.
Your life, your choice - good luck and enjoy.0
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