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  • FIRST POST
    • Edmond
    • By Edmond 4th Aug 18, 10:29 AM
    • 33Posts
    • 26Thanks
    Edmond
    Pension or House Deposit?
    • #1
    • 4th Aug 18, 10:29 AM
    Pension or House Deposit? 4th Aug 18 at 10:29 AM
    My wife and I both recently started working for the NHS. The we immediately cancelled the pension as we can't afford 9.1% of our salaries right now, but will be able to when our son starts to get 30 hours free childcare (or when he goes to school if that doesn't happen).

    It did get me thinking though - are we better off in retirement if we put 9.1% of our salaries into savings for a house deposit (we're currently renting) for 5 to 10 years. I crunched the numbers, and financially we seem to come out about the same in retirement, i.e. we either have a bigger pension, but don't own a house, or we have a smaller pension but own a house outright and don't have to pay rent.

    What's the better option?

    Some things to consider - my wife and I have virtually no existing pension between us at 35. The NHS contribute about 14% for our 9.1%, which is very good. My model for retirement finances is based on us both staying at the NHS until retirement, which is a risky assumption. My parents own their house outright, and I'll likely inherit half with my sister.
Page 4
    • xylophone
    • By xylophone 5th Aug 18, 2:39 PM
    • 27,713 Posts
    • 16,664 Thanks
    xylophone
    'contracted out' checked.
    The NHS pension is no longer contracted out.

    https://www.nhsbsa.nhs.uk/sites/default/files/2017-03/Cost%20and%20contributions%20factsheet%202015-16%20%28Officer%29%20%2803.2017%29%20V3.pdf
    • resilie
    • By resilie 5th Aug 18, 5:45 PM
    • 164 Posts
    • 402 Thanks
    resilie
    The NHS is so short staffed at the moment that it should be easy to pick up a couple of bank shifts a month which will cover your pension contributions. If you do that now you can rejoin the pension asap, and if you work an extra shift here and there you can start putting away for a deposit.
    When I started in the NHS I worked something like 60hs on average, often 80h weeks, and once a month I did 12 days straight without a break. Things are a lot easier now and I wouldn't manage this at my age anymore but I would recommend pulling your socks up till the spring and buckling down...
    • Edmond
    • By Edmond 5th Aug 18, 6:09 PM
    • 33 Posts
    • 26 Thanks
    Edmond
    The NHS is so short staffed at the moment that it should be easy to pick up a couple of bank shifts a month which will cover your pension contributions. If you do that now you can rejoin the pension asap, and if you work an extra shift here and there you can start putting away for a deposit.
    When I started in the NHS I worked something like 60hs on average, often 80h weeks, and once a month I did 12 days straight without a break. Things are a lot easier now and I wouldn't manage this at my age anymore but I would recommend pulling your socks up till the spring and buckling down...
    Originally posted by resilie
    Neither of us are clinical, we're admin. I've recently joined an on-call rota, so I'll see some extra income from that. To be honest I hadn't worked it into any budget because I don't know what I'll make from it yet.
    • resilie
    • By resilie 5th Aug 18, 6:35 PM
    • 164 Posts
    • 402 Thanks
    resilie
    admin staff can do bank...one of our secretaries regularly stays behind to do extra work and gets paid by the hour...plenty of opportunity out there if you go looking for it
    • Edmond
    • By Edmond 5th Aug 18, 6:38 PM
    • 33 Posts
    • 26 Thanks
    Edmond
    admin staff can do bank...one of our secretaries regularly stays behind to do extra work and gets paid by the hour...plenty of opportunity out there if you go looking for it
    Originally posted by resilie
    Thanks, will investigate.
    • crv1963
    • By crv1963 5th Aug 18, 6:47 PM
    • 576 Posts
    • 1,274 Thanks
    crv1963
    Some of our admin joined the Nurse Bank, I think a couple hundred extra a month for 2 shifts. Useful even short term to boost the coffers. Depending on which area of admin you're in you could tell the interview panel and your line managers you want to get a good understanding of how what you do impacts on clinical staff and widen your experience? Also as at your banding you aren't receptionist/ secretaries you could make a good case for wanting direct service user contact as it'll likely be limited in your current role?
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • CityOwl
    • By CityOwl 5th Aug 18, 7:34 PM
    • 47 Posts
    • 54 Thanks
    CityOwl
    Is there somewhere I can work out what my pension contribution would actually be based on my income. I'm due to go up to 37750 next year and the salary calculator says my pension contribution will be
    227, which is more than what you're paying. I selected 'employer' and left 'contracted out' checked.

    https://www.thesalarycalculator.co.uk/salary.php
    Originally posted by Edmond
    I have had a quick look at the NHS Pension Scheme and given it a go, hopefully someone more knowledgeable will correct my figures if they look wrong.

    For a salary of 37,750 you will need to make a 9.3% contribution and your pension will accrue at 1/54. This equates to an annual contribution of 3510.75 (292.56 per month) giving you a pension of 699 per year from state pension age. Minus income tax this figure will drop to 234.05.

    There is a presentation on the NHS Employers website, Page 14 gives an example of someone on 40,000 which is in your ballpark.

    http://www.nhsemployers.org/your-workforce/pay-and-reward/pensions/nhs-pension-scheme

    The presentation looks very informative and highlights what a bonus it is to have a DB Pension.
    "Annual income twenty pounds, annual expenditure nineteen six, result happiness.
    Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery."

    Charles Dickens
    • Edmond
    • By Edmond 5th Aug 18, 7:44 PM
    • 33 Posts
    • 26 Thanks
    Edmond
    Some of our admin joined the Nurse Bank, I think a couple hundred extra a month for 2 shifts. Useful even short term to boost the coffers. Depending on which area of admin you're in you could tell the interview panel and your line managers you want to get a good understanding of how what you do impacts on clinical staff and widen your experience? Also as at your banding you aren't receptionist/ secretaries you could make a good case for wanting direct service user contact as it'll likely be limited in your current role?
    Originally posted by crv1963
    This would look great in both our roles, a really good idea. Don't know how much chance we'd have of getting accepted though with no clinical experience.
    • crv1963
    • By crv1963 5th Aug 18, 8:13 PM
    • 576 Posts
    • 1,274 Thanks
    crv1963
    This would look great in both our roles, a really good idea. Don't know how much chance we'd have of getting accepted though with no clinical experience.
    Originally posted by Edmond


    Everyone starts somewhere with no experience of the area/ role they end up in. What counts is the desire to learn, you didn't start in admin on 37k pa. Our previous CE started as a HCA in elderly care!


    If you don't try you will never know, I don't know what type of Trust you are in or what your admin role is but you could always point out everyone clinical always moans that there is too much admin/ admin doesn't know the clinical pressures!


    There is a role for admin in Trusts just not many clinicians value how much pressure admin take from them for instance I complete an incident report, but I don't report it to the CQC because in the NHS someone I've never met or heard of takes on that task freeing me to have more clinical time. Most NHS clinicians don't even know the way reporting and alert systems work and how important they are to what they do. Or even to them keeping doing their work.


    Finance are the guys who cut posts, but not the guys who work hard shifting bits of budgets around to create posts as well. In most clinicians eyes. I don't mind payroll because I want my salary, pensions officers because I want my pension correct. But estates why do I need to worry about signage or decorating the admin offices? Silo thinking!


    That's part of the problem with big organisations everyone thinks their bit is the essential bit, not that we're all part of a big jigsaw, pull enough pieces out and you can't see the big picture! I'd welcome working bank with someone who's in admin, as long as they know the HCA role they're working in with me on a Ward. They only learn that starting somewhere, no one would expect you to know everything in one go.


    I work in a community role, but love working 2-3 shifts a month on Wards to keep my hand in and I learn the difficulties they have, can communicate problems we have and help in a little way improve communications at a local level between the two areas, I sometimes work with a Social Worker who works as a HCA just to see where his clients end up and sometimes ends up explaining to in-patient staff some of the problems keeping them out of hospital.


    The more we crossover between areas the better service we can provide, within reason of course.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • Alexland
    • By Alexland 5th Aug 18, 10:02 PM
    • 3,878 Posts
    • 3,179 Thanks
    Alexland
    Well done Edmond, with good advice, it looks like you are getting on the right track now.
    • atush
    • By atush 5th Aug 18, 11:05 PM
    • 17,326 Posts
    • 10,878 Thanks
    atush
    Just join the pension, ASAP
    • stoozie1
    • By stoozie1 6th Aug 18, 6:34 AM
    • 613 Posts
    • 571 Thanks
    stoozie1
    OP are you sure there is a local provider of the 30 hrs childcare who has space for your child?

    A substantial amount of providers can't afford to provide it. If you do, great! And remember to budget for top-ups for food/travel etc. I read about one setting where the daily top up is 15

    As a quick aside, CRV1963 you know you don't have to login to total rewards via the intranet right? We just the use government gateway ID we use for taxes/tax credits/self assesment: https://www.totalrewardstatements.nhs.uk/Login
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- 560 April 2670
    • crv1963
    • By crv1963 6th Aug 18, 7:01 AM
    • 576 Posts
    • 1,274 Thanks
    crv1963
    Hi stoozie1,


    I didn't know, but thank you- I'm learning all the time!


    CRV
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • stoozie1
    • By stoozie1 6th Aug 18, 10:34 AM
    • 613 Posts
    • 571 Thanks
    stoozie1
    No problem. If you are anything like my OH there's rarely time at work to access the intranet, so I thought it might be handy.
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- 560 April 2670
    • Edmond
    • By Edmond 6th Aug 18, 12:31 PM
    • 33 Posts
    • 26 Thanks
    Edmond
    Going by the calculation on page 6 of this https://www.nhsbsa.nhs.uk/sites/default/files/2017-05/2015%20Members%20Guide%20%28V7%29%2005.2017.pdf

    -Combined salary of 71,383 in year one, and then 77,698.60 until retirement at 68.
    -Year one, 1/54th of the pensionable salary = 1,321.91.
    -Accumulates +1.5% compound, for 32 years = 2,128.70 by retirement. I've not included the 'treasury order', as I have no idea what it realistically is, although the document gives it as 2%.

    This adds up to a combined annual pension of 62,112.43. If I do use the treasury order example of 2% annually, it goes up to 87,909.94.

    Before I open up a debate as to what to do with the money? Is this correct? This seems much higher than figures some others have given, although they all took 33k as my earnings - top of my band is closer to 41k, which I've assumed we'll stay on until retirement.
    Last edited by Edmond; 06-08-2018 at 1:05 PM.
    • GunJack
    • By GunJack 6th Aug 18, 2:04 PM
    • 10,469 Posts
    • 7,831 Thanks
    GunJack
    Going by the calculation on page 6 of this https://www.nhsbsa.nhs.uk/sites/default/files/2017-05/2015%20Members%20Guide%20%28V7%29%2005.2017.pdf

    -Combined salary of 71,383 in year one, and then 77,698.60 until retirement at 68.
    -Year one, 1/54th of the pensionable salary = 1,321.91.
    -Accumulates +1.5% compound, for 32 years = 2,128.70 by retirement. I've not included the 'treasury order', as I have no idea what it realistically is, although the document gives it as 2%.

    This adds up to a combined annual pension of 62,112.43. If I do use the treasury order example of 2% annually, it goes up to 87,909.94.

    Before I open up a debate as to what to do with the money? Is this correct? This seems much higher than figures some others have given, although they all took 33k as my earnings - top of my band is closer to 41k, which I've assumed we'll stay on until retirement.
    Originally posted by Edmond
    I think you'll find each year's earned pension increases by CPI+1.5%, so it beats inflation. Yes, it can add up to a very tidy pension*





    *providing you get on and re-join it!!!
    ......Gettin' There, Wherever There is......
    • Edmond
    • By Edmond 6th Aug 18, 3:35 PM
    • 33 Posts
    • 26 Thanks
    Edmond
    So I've had a look at some projected outgoings/income over the next 3 years and we can afford to be paying into the pension as of 2019, and save for a house deposit at the same time by 2020. We could have enough to get a mortgage by 2024.

    The catch is that we'd be giving up the bigger house and the new car that we wanted - I'll have to work on convincing my wife to make do for another 6 years!
    • Sky_
    • By Sky_ 6th Aug 18, 3:39 PM
    • 374 Posts
    • 1,358 Thanks
    Sky_
    Can you opt for paying 50% into pensions in the meantime? I know that the local government pension scheme allows this, but I'm not familiar with NHS rules.

    It would be better than paying nothing for the next year or so.
    • Triumph13
    • By Triumph13 6th Aug 18, 5:18 PM
    • 1,386 Posts
    • 1,843 Thanks
    Triumph13
    In the OP's defense, The one number we don't know is how much they are paying in childcare to enable both of them to work full time or close to it. It seems obvious that they should be able to pay pension contributions, save a deposit and still live well on2 good salaries, but if most of one salary is vanishing on childcare it all gets a lot tighter.
    It is also worth considering that if they did both join the pension now and stick at it until 68 then they would both be on significantly MORE when they retired than they are now as they'll have DB plus SP and no NI to pay - not to mention kids being off their hands and mortgage hopefully paid off. The fact that they don't have much pension accumulated yet isn't necessarily an emergency - yet.
    The big if in that though is the need for them both to keep working until 68. If they don't join the scheme soon then not only are they betting their whole future on the continued availability of these jobs with their excellent pension benefits, but they are condemning themselves to having to keep working at those jobs until they drop even if they grow to hate them or have health problems that make them a constant struggle. That is the reason why I would still say they would be mad not to join the scheme now. The house deposit can be saved once the childcare costs start to drop away and as their incomes increase.
    • Edmond
    • By Edmond 6th Aug 18, 6:16 PM
    • 33 Posts
    • 26 Thanks
    Edmond
    In the OP's defense, The one number we don't know is how much they are paying in childcare to enable both of them to work full time or close to it. It seems obvious that they should be able to pay pension contributions, save a deposit and still live well on2 good salaries, but if most of one salary is vanishing on childcare it all gets a lot tighter.
    It is also worth considering that if they did both join the pension now and stick at it until 68 then they would both be on significantly MORE when they retired than they are now as they'll have DB plus SP and no NI to pay - not to mention kids being off their hands and mortgage hopefully paid off. The fact that they don't have much pension accumulated yet isn't necessarily an emergency - yet.
    The big if in that though is the need for them both to keep working until 68. If they don't join the scheme soon then not only are they betting their whole future on the continued availability of these jobs with their excellent pension benefits, but they are condemning themselves to having to keep working at those jobs until they drop even if they grow to hate them or have health problems that make them a constant struggle. That is the reason why I would still say they would be mad not to join the scheme now. The house deposit can be saved once the childcare costs start to drop away and as their incomes increase.
    Originally posted by Triumph13
    Yeah, the pension is worth significantly more than I first assumed, so I do want to get back on it asap.

    I picked 68 out the air to be honest. I didn't think that any earlier would be an option, but if we do manage to stay in the NHS it could be. It's hard to say whether we'd be there all that time.

    Current plan is to get back on pension in April, then re-evaluate what we can put aside for a house deposit.
    Last edited by Edmond; 06-08-2018 at 6:22 PM.
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