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    • ConfusedNHSEmployee
    • By ConfusedNHSEmployee 14th Mar 18, 11:39 PM
    • 6Posts
    • 2Thanks
    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
    • 95,867 Posts
    • 63,599 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
    • 611 Posts
    • 570 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 April 2670
    • mollycat
    • By mollycat 15th Mar 18, 8:13 AM
    • 1,101 Posts
    • 2,194 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
    • 1,478 Posts
    • 926 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
    • 11,561 Posts
    • 13,388 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
    • 540 Posts
    • 1,166 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!
    • cloud_dog
    • By cloud_dog 1st May 18, 5:16 PM
    • 3,910 Posts
    • 2,349 Thanks
    cloud_dog
    • #8
    • 1st May 18, 5:16 PM
    • #8
    • 1st May 18, 5:16 PM
    I think what the OP is looking for, as others have touched on is flexibility, the ability to retire earlier that the NHS pension age.

    What the OP isn't seeing, possibly due to lack of knowledge in this area is the fact that they can make additional provisions outside of their existing main NHS pension.

    OP, what you need to do is to build a separate pot of money that will provide you with the money required to support you from your own retirement date up to your NHS retirement date.

    I am no expert in the NHS pension scheme so I am unsure if making AVC in to the pension will provide you with a route to build an amount of money, outside of the main scheme, which you could then draw on either directly or by transferring just this money out in to a SIPP/personal pension to 'draw down'.

    Outside of the NHS scheme you could choose to open a separate personal pension / SIPP or make additional deposits in to a ISA. The PP/SIPP would benefit from tax relief when making the contribution but 75% would be taxable on the way out (draw down), whilst the ISA contributions would be from net income (after tax) but all monies extracted from it would be tax free.

    I am in a similar position to yourself, although not NHS and much older, insofar as my main scheme is not accessible until 65. I am making additional contributions which I would be able to access earlier than 65 and envisage that I would probably use up all of this additional saved money by the time my main pension kicks in.

    Because of the information I have obtained here and also from my scheme's administrators I am making AVCs through my company scheme (as I benefit from salary sacrifice and I have a way of accessing this money sooner than the main scheme) but, for yourself you may need to open a PP/SIPP.

    Whatever you do, I'll repeat what others have said... do not stop contributing to the NHS scheme.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • dunstonh
    • By dunstonh 2nd May 18, 2:48 PM
    • 95,867 Posts
    • 63,599 Thanks
    dunstonh
    • #9
    • 2nd May 18, 2:48 PM
    • #9
    • 2nd May 18, 2:48 PM
    Shame this thread wasnt in the main pensions section where it belonged. It would have got more responses if it was. In the very remote chance there is actually a board guide/moderator seeing this, could they move it out of this ghost section into the pensions main section.

    Also a shame that the OP never returned to the site after making the post. Last Activity: 14-03-2018 11:45 PM. So, probably all responses unread and wasted our time.
    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.
    • atush
    • By atush 3rd May 18, 2:49 PM
    • 17,271 Posts
    • 10,836 Thanks
    atush
    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
    Big Mistake. HUGE.

    If you are bothering to read out answers that is
    • cloud_dog
    • By cloud_dog 3rd May 18, 10:42 PM
    • 3,910 Posts
    • 2,349 Thanks
    cloud_dog
    Big Mistake. HUGE.
    Originally posted by atush
    Pretty Women film fan then
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • shortcrust
    • By shortcrust 3rd May 18, 11:18 PM
    • 2,149 Posts
    • 3,311 Thanks
    shortcrust
    Shame this thread wasnt in the main pensions section where it belonged. It would have got more responses if it was. In the very remote chance there is actually a board guide/moderator seeing this, could they move it out of this ghost section into the pensions main section.

    Also a shame that the OP never returned to the site after making the post. Last Activity: 14-03-2018 11:45 PM. So, probably all responses unread and wasted our time.
    Originally posted by dunstonh
    It's odd isn't it! Sometimes I think people just like telling strangers about (for example) being mortgage free at 33, debt free, retiring at 50/55.

    Is the OP saying in their last sentence that they're going to kill themselves when they're no longer able to enjoy life - at about 70 to 80ish?! I'll mention this to my 77 year old Dad when I see him tomorrow. Hint hint Dad!
    • andy001
    • By andy001 13th May 18, 9:07 PM
    • 62 Posts
    • 24 Thanks
    andy001
    great discussion
    Very informative post
    • atush
    • By atush 22nd May 18, 11:39 AM
    • 17,271 Posts
    • 10,836 Thanks
    atush
    For anyone but the lazy OP who cant be bothered to read the answers

    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.
    This is just silly.

    What you do, if you dont want to work to 70 (or 65 etc) is to save outside the NHS pension as well. In a PP or Sipp or S&Sisas or both. these can bridge the gap to taking your Nhs pension early/reduced.
    • ConfusedNHSEmployee
    • By ConfusedNHSEmployee 3rd Jun 18, 2:51 PM
    • 6 Posts
    • 2 Thanks
    ConfusedNHSEmployee
    Thank you for all the responses, it has been very informative though very accusatory at times thus I didn't want to fuel any fire. I do value all your input.

    Things have progressed since my original post, I am now moving to a new job outside the NHS with double the pay so the original question is no longer valid. I will, however, use the ideas proposed to help me make better-informed decisions.

    Many thanks.
    • csgohan4
    • By csgohan4 12th Aug 18, 8:59 PM
    • 5,190 Posts
    • 3,309 Thanks
    csgohan4
    On the note for high earners e.g 100k +, you will hit your Annual allowance very soon and opting opt of the NHS may reduce this pension growth, but you will have a tapered allowance to contend with which ultimately means more tax


    Other's have opted in and out on alternate years, but this will impact on your pension when you retire due to reduced contributions, so a double edged sword effectively. If you can afford to, don't opt out and take the AA hit, but unfortunately your tax bills will be higher, it isn't uncommon to get 50k plus on top of your usual income tax bills.




    Anyone thinking of opting out needs to take IFA advice from those who are familiar with the NHS pension scheme


    Using SIPPS will encounter the same issues with AA and tapered allowance. Only difference is you choose how your pension grows when you invest
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
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